SEC News Digest

COMMISSION ANNOUNCEMENTS

Closed Meeting on Thursday, March 26, 2009 at 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Thursday, March 26, 2009 will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; other matters relating to enforcement proceedings.

At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.

ENFORCEMENT PROCEEDINGS

The Commission Enters an Order Temporarily Suspending William D. Shovers, Former CFO of Hayes Lemmerz International, Inc., from Appearing or Practicing Before It

The Securities and Exchange Commission announced today that it temporarily suspended William D. Shovers from the privilege of appearing or practicing before it pursuant to 17 CFR S 201.102(e) following the entry of a permanent injunction against him by the U.S. District Court for the Eastern District of Michigan.

On December 18, 2008, the U.S. District Court for the Eastern District of Michigan entered a final judgment against Shovers. The Final Judgment followed a jury trial in which the jury found that Shovers had violated the following provisions of the securities laws and rules and regulations promulgated thereunder: (1) Section 10(b) of the Securities Exchange Act of 1934) ("Exchange Act") [15 U.S.C. S 78j(b)] and Rule 10b-5 [17 C.F.R. S 204.10b-5] thereunder; (2) Section 17(a)(3) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. S 77q(a)(3)]; and (3) Section 13(b)(5) of the Exchange Act [15 U.S.C. S 78m(b)(5)], and Rules 13b2 1 [17 C.F.R. S 240.13b2 1] and 13b2-2 [17 C.F.R. S 240.13b2 2] thereunder. The jury also found that he aided and abetted certain of Hayes' violations of the federal securities laws.

The Final Judgment permanently enjoined Shovers from violating Section 10(b) of the Exchange Act [15 U.S.C. S 78j(b)] and Rule 10b-5 [17 C.F.R. S 204.10b-5] thereunder; Section 17(a)(3) of the Securities Act [15 U.S.C. S 77q(a)(3)]; Section 13(b)(5) of the Exchange Act [15 U.S.C. S 78m(b)(5)], and Rules 13b2 1 [17 C.F.R. S 240.13b2 1] and 13b2-2 [17 C.F.R. S 240.13b2 2] thereunder; and from aiding and abetting violations of Section 13(a), Section 13(b)(2)(A), and Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. S78m(a), S78m(b)(2)(A), and S78m(b)(2)(B)], and Rules 12b-20, 13a-1, and 13a-13 [17 CFR S240.12b-20, 17 CFR S 240.13a-1, and 17 CFR S 240.13a-13] thereunder. The Final Judgment also barred Shovers, for a period of five (5) years, from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. S 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. S 78o(d)], and ordered him to pay a civil money penalty of $50,000.

For more information about earlier developments in this matter, please see Litigation Release Number 20864/January 23, 2009; Litigation Release Number 20686/August 21, 2008; Litigation Release Number 19668/April 25, 2006; 34-53716/April 25, 2006; 34-53717/April 25, 2006; 34-53718/April 25, 2006. (Rel. 34-59596; AAE Rel. 2952; File No. 13412)

In the Matter of Jeanne M. Rowzee

The Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940 and Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Jeanne M. Rowzee. The Order finds that on December 31, 2008, a judgment was entered against Jeanne M. Rowzee, permanently enjoining her, by consent, from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, in the civil action entitled Securities and Exchange Commission v. Jeanne M. Rowzee, et al., Civil Action Number, SACV 08-1025 DOC (ANx) in the United States District Court for the Central District of California, Southern Division.

The Order further finds that the Commission's complaint alleged that in connection with the fraudulent offer and sale of $52.7 million of securities to approximately 150 investors, Rowzee, a California attorney, falsely promised investors that she would invest in purported PIPE ("private investment in public equity") investments, and promised returns of 19% to 54% within 12 to 16 weeks. The complaint also alleged that Rowzee defrauded investment adviser clients and misappropriated investor funds. The complaint further alleged that Rowzee sold unregistered securities.

Based on the above, the Order suspends Rowzee from appearing or practicing before the Commission as an attorney and bars Rowzee from association with any investment adviser. Rowzee 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 her, the subject matter of these proceedings, and the entry of the judgment in the civil injunctive action. (Rels. 34-59604; IA-2854; File No. 3-13413)

SEC Charges Silicon Valley Hedge Fund Manager With Multi-Million Dollar Offering Fraud

The Securities and Exchange Commission today sued Albert K. Hu, a hedge fund manager with ties to Silicon Valley, for falsely claiming that his funds were overseen by experienced attorneys, auditors and other professionals, and for misappropriating investor funds. As part of its suit, the SEC is seeking an emergency court order freezing Hu's assets. Yesterday, Hu, a long-time Bay Area resident, was arrested in Hong Kong on related criminal charges filed by the United States Attorney's Office in San Jose.

Since 2001, as alleged in the Commission's complaint, Hu claimed to manage hedge funds known as "Asenqua" and "Fireside." The SEC alleges that Hu, and entities he controls, lied to investors from the beginning of his scheme. Hu and the Asenqua hedge funds falsely claimed that several prominent international law firms served as legal counsel for the Asenqua hedge funds. In addition, the defendants identified an individual as "Chief Financial Officer" of the Asenqua hedge funds, when in fact the person had no association with the funds. Hu forged the signature of the purported Chief Financial Officer in communications with investors, according to the complaint. Further, the defendants provided investors with supposedly independently audited financial statements for two of the funds. In reality, Hu paid for a virtual office with an address in the San Francisco financial district for the "independent" audit firm.

According to the Commission's complaint, Hu raised more than $5 million from investors with connections to Silicon Valley and transferred hundreds of thousands of dollars of investor funds into foreign bank accounts without informing investors. The SEC further alleges that recently, Hu has refused investors' requests for the return of their funds. The Commission's complaint charges Hu and the entities he controls, Asenqua, Inc.; Asenqua Capital Management, LLC; AQC Asset Management, Ltd.; and Fireside Capital Management, Ltd., with violating the antifraud provisions of the federal securities laws, including Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Additionally, the SEC's complaint charges Hu with violations of Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. In the action filed today, the Commission sought a temporary injunction against violations of the antifraud provisions, a temporary freeze of defendants' assets, an accounting, and other relief.

The SEC's investigation is continuing. The SEC acknowledges the assistance of the Monetary Authority of Singapore, the Hong Kong Securities and Futures Commission, the Federal Bureau of Investigation and U.S. Attorney's Office for the Northern District of California which also unsealed a criminal complaint and announced Hu's arrest in Hong Kong today. [SEC v. Albert K. Hu, Asenqua, Inc., Asenqua Capital Management, LLC, AQC Asset Management, Ltd., and Fireside Capital Management, Ltd., Case No. 09-01177 (RMW) (ND Cal.)] (LR-20962A)

SEC Charges Former New York State Official and Top Political Advisor with Defrauding the NY State Retirement Fund in Multimillion Dollar Kickback Scheme

The Securities and Exchange Commission today charged New York's former Deputy Comptroller and a top political advisor with extracting kickbacks from investment management firms seeking to manage the assets of New York's largest pension fund.

The complaint, filed in federal district court in Manhattan, names as defendants David Loglisci, former Deputy Comptroller and Chief Investment Officer of the New York State Common Retirement Fund, Henry "Hank" Morris, the top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi, and three entities controlled by Morris: Nosemote LLC, Pantigo Emerging LLC and Purpose LLC.

According to the complaint, the two men orchestrated a fraudulent scheme from 2003 through late 2006 that corrupted the integrity of the New York State Common Retirement Fund in order to enrich Morris as well as others with close ties to Morris and Loglisci.

Specifically, the SEC alleges that Loglisci caused the fund to invest billions of dollars with private equity firms and hedge fund managers who together paid millions of dollars in the form of sham "finder" or "placement agent" fees to obtain investments from the fund.

The SEC alleges that the payments to Morris and others were kickbacks that resulted from quid pro quo arrangements or that were otherwise fraudulently induced by the defendants. As laid out in the complaint, Loglisci ensured that investment managers who made the requisite payments to Morris -- and other recipients designated by Morris and Loglisci -- were rewarded with lucrative investment management contracts, while investment managers who declined to make such payments were denied fund business.

The SEC alleges that Loglisci repeatedly directed investment managers, who solicited him for investment business, to Morris or certain other individuals and signaled to the investment managers that they first needed to "hire" Morris as a finder or placement agent. Neither Morris nor anyone else who received the payments at issue allegedly performed legitimate placement or finder services for the investment management firms who made the payments.

In some cases, the investment managers had already allegedly hired a finder or placement agent of their own and were already negotiating an investment with Loglisci when they were told that they also needed to "hire" Morris or another individual. Once the sham finder fee was agreed upon, Loglisci approved the proposed deal with the investment management firm.

The SEC further asserts that Loglisci and Morris took steps to conceal these improper payments and quid pro quo arrangements from relevant members of the Comptroller's investment staff and the fund's Investment Advisory Committee. In some instances, the two men even arranged for investment managers to make payments to another individual who would then covertly funnel a portion of these sham fees to Morris, sometimes even without the knowledge of the investment managers. In addition, Morris allegedly paid the girlfriend of a high-ranking member of the Comptroller's staff nearly $100,000 in cash to ensure that the staff member would not ask questions or otherwise reveal the scheme to others.

The Complaint further alleges that Loglisci also personally benefited from his role in the scheme. In addition to receiving Morris's support for promotion to Deputy Comptroller, Loglisci obtained funding from Morris and the principal of a private equity firm for a low budget film that Loglisci and his brothers produced.

The SEC's complaint, which also charges three entities owned and controlled by Morris, alleges violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint seeks permanent injunctions against future violations of the federal securities laws, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties.

The SEC acknowledges the assistance of the New York Attorney General's Office, which today filed related criminal charges against Morris and Loglisci. The Commission's investigation in this matter is ongoing. [SEC v. Henry Morris, David Loglisci, Nosemote LLC, Pantigo Emerging LLC and Purpose LLC (S.D.N.Y. 09 Civ. 2518)] (LR-20963)

INVESTMENT COMPANY ACT RELEASES

Wachovia Securities, LLC, et al.

The Commission has issued an order to Wachovia Securities, LLC, et al. (Wachovia Securities) under Section 9(c) of the Investment Company Act exempting applicants and any other company of which Wachovia Securities is or becomes an affiliated person from Section 9(a) of the Act with respect to an injunction entered by the U.S. District Court for the Northern District of Illinois on Feb. 17, 2009. (Rel. IC-28648 - March 17)

ING Investments, LLC, et al.

A notice has been issued giving interested persons until April 13, 2009, to request a hearing on an application filed by ING Investments, LLC, et al., for an order under Section 6(c) of the Investment Company Act of 1940 (Act) for an exemption from Rule 12d1-2(a) under the Act. The order would permit funds of funds relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-28650 - March 17)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by the New York Stock Exchange to extend until June 9, 2009, the operation of interim NYSE Rule 128 (SR-NYSE-2009-26), which permits the Exchange to cancel or adjust clearly erroneous executions if they arise out of the use or operation of any quotation, execution or communication system owned or operated by the Exchange, including those executions that occur in the event of a system disruption or system malfunction, has become immediately effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59581)

A proposed rule change (SR-CBOE-2009-017) filed by the Chicago Board Options Exchange to allow conversions and reversals to be routed to the complex order book has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59585)

A proposed rule change filed by the NASDAQ Stock Market (SR-NASDAQ-2009-025) to expand the $1 Strike Price Program has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59588)

A proposed rule change filed by NASDAQ OMX BX (SR-BX-2009-016) to expand the $1 Strike Price Program has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59589)

A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2009-21) to expand the $1 Strike Price Program has become immediately effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59590)

A proposed rule change (SR-NSX-2009-01) filed by the National Stock Exchange to amend the NSX Fee Schedule to implement a program to award rebates for liquidity adding Zero Display Orders and clarify the definition of "Liquidity Adding Average Daily Volume" has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59591)

A proposed rule change filed by the New York Stock Exchange (SR-NYSE-2009-29) amending the NYSE rule book to delete references to specific exchange systems and to remove the requirement that opening transactions receive specific designations pursuant to NYSE Rules 79A and 115A has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59592)

A proposed rule change filed by the NYSE Alternext US (NYSEALTR-2009-28) amending the NYSE Alternext rules to delete references to specific exchange systems and to remove the requirement that opening transactions receive specific designations pursuant to NYSE Rules 79A and 115A has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59593)

Approving Proposed Rule Change

The Commission approved a proposed rule change, as modified by Amendment No. 2 thereto, submitted by the NASDAQ Stock Market (SR-NASDAQ-2008-102) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 establishing a pilot program for NASDAQ Basic data feeds. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59582)

Accelerated Approval of Proposed Rule Change

The Securities and Exchange Commission has issued an order granting accelerated approval of proposed rule changes, as amended, filed by the International Securities Exchange (SR-ISE-2009-04), Chicago Board Options Exchange (SR-CBOE-2009-001), NYSE Arca (SR-NYSEArca-2009-10), and NYSE Alternext US (SR-NYSEALTR-2009-11) to expand the $1 Strike Program. Publication is expected in the Federal Register during the week of March 23. (Rel. 34-59587)

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