SEC News Digest

ENFORCEMENT PROCEEDINGS

Commission Revokes Registrations of Securities of Two Issuers for Failure to Make Required Periodic Filings

On May 13, the Commission instituted and settled separate administrative proceeding pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act) revoking the registration of each class of registered securities of each of the following issuers for failure to make required periodic filings with the Commission (ticker symbol provided).

• FrontLine Capital Group (FLCGQ)
• Large Scale Biology Corp.

Without admitting or denying the findings of the order pertaining to each issuer, except as to jurisdiction, which each admitted, each of the foregoing issuers separately consented to the entry of an order pertaining to that issuer finding that it had failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of the issuer's securities pursuant to Exchange Act Section 12(j).

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 . . . .

(In the Matter of Large Scale Biology Corp., 34-59909, File No. 3-13467; In the Matter of FrontLine Capital Group, 34-59911, File No. 3-13468)

Commission Revokes Registration of Securities of Core Technologies Pennsylvania, Inc. for Failure to Make Required Periodic Filings

On May 13, the Commission revoked the registration of each class of registered securities of Core Technologies Pennsylvania, Inc. (CCOR) 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, CCOR 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 Core Technologies Pennsylvania, 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 CCOR's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against CCOR in In the Matter of Core Technologies Pennsylvania, Inc., et al., Administrative Proceeding File No. 3-13384.

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 Core Technologies Pennsylvania, Inc., et al., Administrative Proceeding File No. 3-13384, Exchange Act Release No. 59467 (Feb. 27, 2009). (Rel. 34-59910; File No. 3-13384)

In the Matter of Wolfe & Hurst Bond Brokers, Inc. and Peter J. Debany

On March 13, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b), 15B(c) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order against Wolfe & Hurst Bond Brokers, Inc. (Wolfe & Hurst) and Peter J. Debany (Debany). The Order finds that Wolfe & Hurst, a broker-dealer that operates as a municipal securities "brokers' broker," and Debany, one of the firm's former registered representatives, manipulated bids-wanted auctions for municipal bonds.

The Order finds that from January 2002 through December 2003, Wolfe & Hurst, through Debany, while conducting certain bids-wanted auctions for municipal bonds, knowingly engaged in materially manipulative conduct, which had the effect of reducing the spread between winning bids and the second-highest or "cover" bids and, in some cases, may have affected the prices paid for the municipal bonds. Wolfe & Hurst and Debany artificially narrowed the spreads of certain auctions by: 1) lowering the bids of the highest bidders; and 2) entering new bids in amounts between the winning bid and the existing cover bid during the auctions and advising the high bidder and the seller that those new cover bids were received from other municipal securities broker-dealers.

Based on the above, the Order: finds Wolfe & Hurst willfully violated, and Debany willfully aided and abetted and caused violations of, Sections 15(c)(1)(A) and 15B(c)(1) of the Securities Exchange Act of 1934 and Municipal Securities Rulemaking Board Rule G-17; requires Wolfe & Hurst and Debany to cease and desist from committing or causing any violations or any future violations of those provisions; and censures Wolfe & Hurst and Debany. The Order also bars Debany from association with any broker, dealer or municipal securities dealer with the right to reapply for association after 1 year, and requires Wolfe & Hurst and Debany to each pay a civil money penalty in the amount of $25,000. Wolfe & Hurst and Debany consented to the issuance of the Order without admitting or denying the Commission's findings.

The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (formerly known as the National Association of Securities Dealers or NASD) and the Municipal Securities Rulemaking Board. (Rel. 34-59913; File No. 3-13469)

In the Matter of Chandrashekhar Gopinathan

On March 13, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 (Securities Act), and Sections 15(b) and 21C of the Securities Exchange Act of 1934 (Exchange Act) and Notice of Hearing (Order) against Chandrashekhar Gopinathan (Gopinathan or Respondent).

The Order arises out of alleged materially misleading statements and omissions in offering documents in connection with a major, private securities offering backed by a portfolio of regional aircraft manufactured by Bombardier, Inc. (Bombardier). RASPRO Trust 2005 (RASPRO), a special purpose entity created by Bombardier, sponsored the $1.67 billion offering and Wachovia Capital Markets, LLC. (Wachovia) served as the underwriter. On Sept. 23, 2005, the offering closed. According to the Order, within the first three months after closing, Bombardier discovered that RASPRO would have to draw on a liquidity reserve to make the first payment on one of the three tranches of securities involved in the offering, the B Notes, and that a guarantor would have to step in and purchase the B Notes in the fifth year of the 18 year transaction.

The Order further alleges Gopinathan, a vice-president and a junior associate served on the Commercial Aviation Team of Wachovia's Structured Asset Finance Group, and were responsible for preparing the cash flow models for the transaction. One of the purposes of the models was to show that the transaction would have sufficient liquidity to pay interest and principal when due. According to the Order, Gopinathan, the junior associate, and the managing director - the three members of the Commercial Aviation Team - were aware of the potential shortfalls as early as July 2005, but did not tell anyone else at Wachovia. The Order alleges that instead, Gopinathan and the junior associate, on a managing director's orders, manipulated certain payment assumptions in the cash flow models in order to hide the shortfalls. Although the models themselves were not part of the offering memorandum, the outputs (or results) from the models and the payment assumptions used in the models were included in the offering. As a result, according to the Order, the offering memorandum provided materially false and incomplete information about the liquidity of the B Note transaction.

Based on the above, a hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine whether Gopinathan should be ordered to cease-and-desist from committing or causing violations of and any future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and what, if any, remedial action is appropriate in the public interest. The Commission directed that an Administrative Law Judge issue an initial decision within 300 days from the date of service of this Order. (Rels. 33-9031; 34-59914; File No. 3-13470)

INVESTMENT COMPANY ACT RELEASES

ProShares Trust, et al.

An order has been issued on an application filed by ProShares Trust, et al. The order amends an existing order that permits: (a) series of an open-end management investment company (Initial Funds) to issue shares redeemable in large aggregations only (Creation Unit Aggregations); (b) secondary market transactions in the shares to occur at negotiated prices; (c) dealers to sell the shares to purchasers in the secondary market unaccompanied by a prospectus, when prospectus delivery is not required by the Securities Act of 1933; and (d) certain affiliated persons of the Initial Funds to deposit securities into, and receive securities from, the Initial Funds in connection with the purchase and redemption of Creation Unit Aggregations (Prior Order). Applicants seek to amend the Prior Order to: (a) provide greater operational flexibility to the funds; (b) expand the category of funds designed to correspond to the return of an underlying index to include funds that seek to match the performance of an underlying index that applies a strategy referred to as 130/30; (c) permit funds that are based on foreign equity securities indices to pay redemption proceeds more than seven days after the tender of a Creation Unit Aggregation for redemption; (d) delete a condition related to future relief in the Prior Order and permit applicants to offer additional series using underlying securities indices different than those permitted under the Prior Order; (e) delete the relief granted in the Prior Order from section 24(d) of the Investment Company Act and revise the applications on which the Prior Order was issued (Prior Applications) accordingly; and (f) amend the terms and conditions of the Prior Applications with respect to certain disclosure requirements. (Rel. IC-28724 - May 12)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by the NASDAQ Stock Market modifying fees for members using the NASDAQ Market Center and NASDAQ Options Market (SR-NASDAQ-2009-041) 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. 34-59879)

A proposed rule change filed by the International Securities Exchange (SR-ISE-2009-22) relating to Far Away Market Maker 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. 34-59904)

Accelerated Approval of Proposed Rule Change

NYSE Arca has filed, and the Commission has approved on an accelerated basis, a proposed rule change (SR-NYSEArca-2009-40) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to listing and trading of shares of the ETFS Gold Trust. Publication is expected in the Federal Register during the week of May 11. (Rel. 34-59895)

SECURITIES ACT REGISTRATIONS

• Latest Securities Act registrations (TXT)

RECENT 8K FILINGS

• Latest 8-K filings (TXT)

http://www.sec.gov/news/digest/2009/dig051309.htm