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ENFORCEMENT PROCEEDINGSIn the Matter of Thomas J. SmithOn November 25, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Thomas J. Smith (Smith). The Order finds that on Oct. 20, 2008, the United States District Court for the District of Columbia entered a final judgment against Smith permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 10b-5, and Sections 206(1), (2) and (3) of the Investment Advisers Act (Final Judgment), in a matter entitled [Securities and Exchange Commission v. Thomas J. Smith, 1:08-cv-01640] (LR-20749). Based on the above, the Order bars Smith from association with any investment adviser. Smith consented to the issuance of the Order without admitting or denying any of the findings in the Order, except as to the Commission's jurisdiction over him, the subject matter of these proceedings, and the entry of the Final Judgment. (Rel. IA-2810; File No. 3-13301) In the Matter of 5G Wireless Communications, Inc.On November 25, the Commission issued an Order Instituting Cease-and-Desist and Exemption Suspension Proceedings, Making Findings, Imposing a Cease-and-Desist Order, and Permanently Suspending the Regulation E Exemption Pursuant to Section 9(f) of the Investment Company Act of 1940 and Rule 610(c) of Regulation E (Order) against 5G Wireless Communications, Inc. (5G Wireless). The Order finds that 5G Wireless had, among other things, issued rights to purchase its securities without expiration to non-security holders; issued stock with unequal voting rights; issued warrants without authorization of its shareholders which, upon conversion, would represent more than 25% of its outstanding voting securities and be issued at a price below the market value on the date of issuance; and issued securities for services. As a result, 5G Wireless violated Sections 18(d), 18(i), and 23(a), respectively, of the Investment Company Act. In addition, 5G Wireless failed to obtain a fidelity bond as required under Section 17(g) of the Investment Company Act and Rule 17g-1 thereunder, and failed to adopt and implement written compliance procedures as required under Investment Company Act Rule 38a-1. Finally, 5G Wireless failed to comply with Rule 609 of Regulation E because it did not file an offering status report on Form 2-E in connection with a securities offering under Regulation E commenced in October 2004. Based on the above, the Order permanently suspends the Regulation E exemption and orders 5G Wireless to cease and desist from committing or causing any violations and any future violations of Sections 17(g), 18(d), 18(i), and 23(a) of the Investment Company Act and Rules 17g-1 and 38a-1 thereunder. 5G Wireless consented to the issuance of the Order without admitting or denying any of the findings. (Rel. 33-8985; IC-28522; File No. 3-13302) In the Matter of Renew Energy Resources, Inc.On November 26, the Commission issued an Order Instituting Cease-and-Desist and Exemption Suspension Proceedings, Making Findings, Imposing a Cease-and-Desist Order, and Permanently Suspending the Regulation E Exemption Pursuant to Section 9(f) of the Investment Company Act of 1940 and Rule 610(c) of Regulation E (Order) against Renew Energy Resources, Inc. (Renew Energy). The Order finds that Renew Energy had, among other things, issued rights to purchase its securities without expiration to non-security holders, issued prohibited non-voting stock, and issued securities for services or property other than cash. As a result, Renew Energy violated Sections 18(d), 18(i), and 23(a), respectively, of the Investment Company Act. In addition, Renew Energy failed to obtain a fidelity bond, as required under Section 17(g) of the Investment Company Act and Rule 17g-1 thereunder. Finally, Renew Energy failed to comply with Rule 609 of Regulation E because it did not file offering-status reports on Form 2-E in connection with securities offerings under Regulation E commenced in August 2004, September 2004 August 2005, and October 2005. Based on the above, the Order permanently suspends the Regulation E exemption and orders Renew Energy to cease and desist from committing or causing any violations and any future violations of Sections 17(g), 18(d), 18(i), and 23(a) of the Investment Company Act and Rule 17g-1 thereunder. Renew Energy consented to the issuance of the Order without admitting or denying any of the findings. (Rel. 33-8986; IC-28523; File No. 3-13303) In the Matter of Lexington Resources, Inc. and Grant AtkinsOn November 26, the Commission issued an Order Making Findings and Imposing Cease-and-Desist Orders Pursuant to Section 8(a) of the Securities Act of 1933 as to Lexington Resources, Inc. and Grant Atkins (Order). The Order finds that Lexington Resources, Inc. (Lexington) and Atkins, Lexington's CEO and Chairman, issued or caused to be issued 4.7 million shares of Lexington stock to certain consultants and another individual between November 2003 and March 2006. Lexington and Atkins attempted to register these issuances using Form S-8, an abbreviated form of registration statement that may be used to register issuances of shares to employees and certain types of consultants. Lexington's attempts to register these issuances on Form S-8 were invalid because the consultants were performing services expressly disallowed for Form S-8 registrations (including preparing and distributing promotional materials, directing investor relations efforts, and raising capital) and the other individual did not provide any services at all. The Order thus finds that Lexington and Atkins violated the registration provisions of the federal securities laws. Lexington and Atkins, without admitting or denying the findings, consented to the issuance of the Order, which orders Lexington and Atkins to cease and desist from committing or causing any violations and any future violations of Sections 5(a) and 5(c) of the Securities Act of 1933. (Rel. 33-8987; File No. 3-13109) Former Diebold Sales Representative Settles SEC Insider Trading ChargesThe Commission announced today that on November 19, the Honorable Robin J. Cauthron, United States District Judge for the Western District of Oklahoma, entered final judgment against Robert G. Cole in SEC v. Cole, Civ 08-265 C (W.D. Okla.), an insider trading case the Commission filed on March 13, 2008. The Commission's complaint alleged that Cole, a former sales representative for Diebold, Inc., made over $500,000 in illegal profits by using material, nonpublic information to trade Diebold securities. Diebold is an Ohio-based public company that manufactures and sells automated teller machines, bank security systems, and electronic voting machines. The Commission's complaint alleged that on Sept. 15, 2005, shortly after learning from his sales manager that revenues and orders in Diebold's North American regional bank business were significantly below target, Cole began purchasing hundreds of soon-to-expire Diebold put options contracts, at a total cost of $70,110, anticipating that Diebold would lower its earnings forecast and the price of Diebold stock would fall. As alleged in the complaint, on Sept. 21, 2005 -- one day after Cole completed purchasing these Diebold put option contracts -- Diebold announced that it was lowering its earnings forecasts, primarily because of a revenue shortfall in the company's North American regional bank business. After this public announcement, Diebold's stock price dropped sharply, closing at $37.27 per share, which was a 16% drop from the previous day's closing price of $44.13. As the complaint alleged, Cole immediately sold the Diebold put option contracts for $579,190, realizing illicit profits of $509,080 (a 700% return). The Commission alleged that Cole violated Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Cole consented to the entry of a final judgment that permanently enjoins him from future violations of these provisions, and orders him to disgorge his illicit profits of $509,080, which will be deemed satisfied by a forfeiture order entered in a related criminal case. In that case, U.S. v. Robert Cole, No. 5:08-CR-327 (N.D. Ohio), Cole pled guilty to a felony charge of securities fraud, and was sentenced to a prison term of 1 year and 1 day, two years of supervised release, forfeiture of $509,080, and a $180,000 fine. The Commission wishes to thank the Philadelphia Stock Exchange for its valuable assistance in this matter. [SEC v. Robert G. Cole, Civ 08-265 C (W.D. Okla.) (RJC)] (LR-20817) Parties Stipulate to Dismissal of Action Without PrejudiceThe Commission announced that on Oct. 23, 2008, the parties filed a stipulation of dismissal of this action without prejudice. The Commission filed a complaint in this action on Nov. 2, 2005, alleging that certain unknown purchasers of call options for the stock of Placer Dome, Inc., violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission subsequently amended the complaint to name Boutraille Corporation, Trinity Partners Ltd., and John C. Fraleigh as defendants. The stipulated dismissal terminates this action without prejudice. [SEC v. Boutraille Corp., et al., 05 CV 9300 (S.D.N.Y.) (GBD)] (LR-20818) SELF-REGULATORY ORGANIZATIONSProposed Plan for the Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2The International Securities Exchange and the Financial Industry Regulatory Authority filed a proposed plan for the allocation of regulatory responsibilities pursuant to Rule 17d-2 (File No. 4-574). Publication is expected in the Federal Register during the week of Dec. 1, 2008. (Rel. 34-59003) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2008/dig112608.htm
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