SEC News Digest

COMMISSION ANNOUNCEMENTS

SEC Approves Measures to Strengthen Oversight of Credit Rating Agencies

The Securities and Exchange Commission today approved a series of measures to increase transparency and accountability at credit rating agencies, and ensure that firms provide more meaningful ratings and greater disclosure to investors.

The new measures impose additional requirements on credit rating agencies, whose ratings of residential mortgage-backed securities backed by subprime mortgage loans and of collateralized debt obligations linked to subprime loans contributed to the recent turmoil in the credit markets. The SEC also proposed additional measures related to transparency and competition concerning credit rating agencies. The SEC's actions were informed by the agency's extensive 10-month examination of three major credit rating agencies that found significant weaknesses in ratings practices.

"These comprehensive rules touch every aspect of the credit rating process - from conflicts of interest, to publication of ratings methodologies, to disclosure of ratings track records," said SEC Chairman Christopher Cox. "The SEC's examinations of credit rating agencies uncovered serious deficiencies that these rules will address, so that investors and markets will have better information to guide investment decisions."

This is the second set of credit rating agency reforms since the SEC received its new regulatory authority from Congress to register and oversee credit rating agencies. The initial rules were implemented by the Commission under the Credit Rating Agency Reform Act in June 2007. The regulatory program established through the Credit Rating Agency Reform Act allows the SEC to promulgate rules regarding public disclosure, recordkeeping and financial reporting, and substantive requirements to ensure that credit rating agencies conduct their activities with integrity and impartiality.

Public comments on the new proposed amendments must be received by the Commission within 45 days after their publication in the Federal Register. (Press Rel. 2008-284)

ENFORCEMENT PROCEEDINGS

Commission Revokes Registration of Securities of 2000 New Commerce, Inc. for Failure to Make Required Periodic Filings

On December 3, the Commission revoked the registration of each class of registered securities of 2000 New Commerce, Inc. (2000 New) for failure to make required periodic filings with the Commission.

Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, 2000 New consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to 2000 New Commerce, Inc. finding that it had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of 2000 New's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against 2000 New in In the Matter of 2 I, Inc., et al., Administrative Proceeding File No. 3-13294.

Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:

No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .

For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of 2 I, Inc., et al., Administrative Proceeding File No. 3-13294, Exchange Act Release No. 58982 (Nov. 20, 2008). (Rel. 34-59042; File No. 3-13294)

SEC Recovers More Than $2.6 Million Upon Entry of Default Judgment Against Italian Resident for Insider Trading

The Commission recovered over $2.6 million as part of the relief ordered against Cristian De Colli, a machinery engineer residing in Rome, Italy, for engaging in insider trading in the securities of DRS Technologies, Inc., prior to the public disclosure of advanced merger negotiations. Final judgment by default was entered after the Commission successfully obtained emergency injunctive relief against De Colli within days of the DRS merger announcement.

On Oct. 22, 2008, the Honorable Paul A. Crotty, United States District Judge in the Southern District of New York, entered final judgment by default against De Colli, based on his failure to answer or otherwise respond to the Commission's complaint. The final judgment directs De Colli's U.S.-based broker to liquidate his account and remit the proceeds - currently more than $2.6 million - to the Court, in partial satisfaction of his obligation under the final judgment to pay $2,161,818.42 in disgorgement, $19,861.72 in prejudgment interest, and $2,161,818.42 in civil penalties. The final judgment permanently enjoins De Colli from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The Commission's complaint alleged that while in possession of material, nonpublic information regarding merger talks between DRS and Finmeccanica S.p.A, Cristian De Colli purchased shares and call options of DRS common stock. The Complaint further alleged that after public disclosure of the merger talks, De Colli liquidated all of his call options for an illicit profit of five times the amount of his original investment.

The SEC's complaint further alleged that immediately following a May 8, 2008 Wall Street Journal article reporting the advanced merger negotiations and after confirmation by DRS that it was engaged in talks regarding a potential strategic transaction, De Colli liquidated all of his call options and made his ill-gotten profit of more than $2.1 million on his initial investment of approximately $422,000. Finmeccanica later announced on May 12, 2008 that it would acquire DRS for $5.2 billion, or $81 a share.

For more information about this matter, please see Litigation Release No. 20581 (May 16, 2008).

The Commission's investigation is continuing. [SEC v. Cristian De Colli, United States District Court for the Southern District of New York, Civil Action No. 08-CIV-4520 (S.D.N.Y.)](LR-20819)

SELF-REGULATORY ORGANIZATIONS

Order Setting Aside Action by Delegated Authority and Approving a Proposed Rule Change

The Commission set aside an earlier action taken by delegated authority and approved a proposed rule change (SR-NYSE Arca-2006-21) by NYSE Arca to establish fees for the receipt and use of certain market data that NYSE Arca makes available. Publication is expected in the Federal Register during the week of December 1. (Rel. 34-59039)

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http://www.sec.gov/news/digest/2008/dig120308.htm