SEC News Digest (Issue 2009-87; May 7, 2009)

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COMMISSION ANNOUNCEMENTS

Commission Meetings

Following is a schedule of Commission meetings, which will be conducted under provisions of the Government in the Sunshine Act. Meetings will be scheduled according to the requirements of agenda items under consideration.

Open meetings will be held in the Auditorium, Room L-002 at the Commission's headquarters building, 100 F Street, N.E., Washington, D.C. Visitors are welcome at all open meetings, insofar as space is available. Persons wishing to photograph or videotape Commission meetings must obtain permission in advance from the Secretary of the Commission. Persons wishing to tape record a Commission meeting should notify the Secretary's office 48 hours in advance of the meeting.

Any member of the public who requires auxiliary aids such as a sign language interpreter or material on tape to attend a public meeting should contact SECInterpreter@SEC.gov at least three business days in advance. For any other reasonable accommodation related disability contact DisabilityProgramOfficer or call 202-551-4158.

Open Meeting - Wednesday, May 13, 2009 - 10:00 a.m.

The subject matter of the Open Meeting will be:

The Commission will hear oral argument in an appeal by Thomas C. Bridge, James D. Edge, and Jeffrey K. Robles from the decision of an administrative law judge. The law judge found that Bridge, a registered representative formerly associated with A.G. Edwards, and Charles Sacco, another former A.G. Edwards registered representative who settled a related Commission proceeding against him, willfully violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5 by taking action to "continue market timing after they had been restricted from doing so" by registered investment companies. The law judge further found that Edge, Bridge's supervisor, failed reasonably to supervise Bridge with a view to preventing his antifraud violations, and that Robles, Sacco's supervisor, failed reasonably to supervise Sacco.

For these violations, the law judge imposed the following sanctions: Bridge was ordered to cease and desist from violating or causing violations of the antifraud provisions, to disgorge approximately $40,000 plus prejudgment interest, to pay a $250,000 civil penalty, and to serve a one-year suspension from associating with a broker or dealer. Edge and Robles were both ordered to pay a $250,000 civil penalty, were barred from associating with a broker or dealer in a supervisory capacity, and were suspended from associating with a broker or dealer in any capacity for thirty days.

Among the issues likely to be argued are whether Bridge's and Sacco's conduct in connection with their market timing activity was fraudulent, whether Edge and Robles provided reasonable supervision under the circumstances, and, if so, whether and to what extent sanctions should be imposed on them.

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.

Open Meeting - Thursday, May 14, 2009 - 10:00 a.m.

The subject matter of the Open Meeting will be:

The Commission will consider custody-related matters, including whether to propose amendments to Rule 206(4)-2 under the Investment Advisers Act of 1940 and related forms and rules. The proposed amendments would enhance the protections provided advisory clients when they entrust their funds and securities to an investment adviser. If adopted, the amendments would require investment advisers having custody of client funds and securities to obtain a surprise examination by an independent public accountant, and, unless the client assets are maintained with an independent custodian, obtain a review of custodial controls from an independent public accountant.

ENFORCEMENT PROCEEDINGS

In the Matter of Royal Spring Water, Inc.

On May 6, the Commission instituted an administrative proceeding against Royal Spring Water, Inc. (Royal Spring), pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act). Royal Spring is a Nevada corporation headquartered in Van Nuys, California. The purpose of the proceeding is to determine whether the registration of Royal Spring's common stock should be suspended, for a period not exceeding twelve months, or revoked. The Division of Enforcement (Division) alleges that Royal Spring failed to comply with Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1 and 13a-13 by failing to file Form 10-KSB for the year ended Aug. 31, 2008, Forms 10-QSB for the quarters ended Nov. 30, 2007, Feb. 29, 2008 and May 31, 2008, and Form 10-Q for the quarter ended Nov. 30, 2008.

A hearing will be scheduled to take evidence on the Division's allegations, to afford Royal Spring the opportunity to establish defenses to the allegations, and to determine whether the registration of Royal Spring's common stock should be suspended, for a period not exceeding twelve months, or revoked.

The Commission ordered that the Administrative Law Judge in these proceedings issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-59878; File No. 3-13462).

In the Matter of John H. Lohmeier

On May 7, 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 John H. Lohmeier (Lohmeier). The Order finds that Lohmeier is President and 100% shareholder of Enterprise Trust Company (Enterprise). The Order further finds that on June 28, 2008, a permanent injunction was entered by consent in the district court action against Lohmeier, permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The Commission's complaint in the civil injunctive action alleged that Lohmeier fraudulently induced hundreds of customers of Advisory Financial Consultants (AFC), a registered broker-dealer, to transfer custody of approximately $49 million in mutual funds to Enterprise. The complaint further alleged that, unbeknownst to and without the authorization of the AFC customers, Lohmeier placed their mutual funds into margin and other accounts where the AFC customers' securities served as collateral for leveraged margin trading, including options trading and short selling, that was intended to benefit Enterprise's principals, including Lohmeier, and other Enterprise customers. The complaint alleged that this margin trading was not intended to and did not benefit the AFC customers.

Based on the above, the Order bars Lohmeier from association with any investment adviser. Lohmeier consented to the issuance of the Order without admitting or denying any of the findings in the order except as to jurisdiction and the entry of a permanent injunction against him.

For further information see [SEC v. Enterprise Trust Company, et al., Civil Action 08 C 1260, United States District Court for the Northern District of Illinois, filed March 3, 2008] (LR-20482 and LR-20635). (Rel. IA-2873; File No. 3-13464)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change (SR-Phlx-2009-41) filed by NASDAQ OMX PHLX relating to elimination of options transaction charge for customer executions in options on RUT, RMN, MNX and NDX 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 May 11. (Rel. 34-59857)

A proposed rule change filed by the New York Stock Exchange extending a temporary equity transaction fee for shares executed on the NYSE MatchPointSM system, effective May 1, 2009 until June 30, 2009 (SR-NYSE-2009-44), 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 May 11. (Rel. 34-59864)

A proposed rule change filed by NASDAQ OMX BX relating to the volume discount given to market makers (SR-BX-2009-022) 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 May 11. (Rel. 34-59865)

A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2009-026) relating to temporary membership status and interim trading permit access fees 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 May 11. (Rel. 34-59866)

A proposed rule change filed by the NASDAQ Stock Market to establish the Trade Reporting File Upload service and related fees (SR-NASDAQ-2009-045) 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 May 11. (Rel. 34-59871)

Proposed Rule Change

The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2009-039) to amend the certificate of incorporation and by-laws of the NASDAQ OMX Group, Inc. Publication is expected in the Federal Register during the week of May 11. (Rel. 34-59858)

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