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COMMISSION ANNOUNCEMENTSRonald Crawford Named SEC’s First Chief Counsel for Diversity InitiativesThe Securities and Exchange Commission today announced that Ronald L. Crawford will become the agency’s first Chief Counsel for Diversity and Policy Initiatives to further bolster the SEC’s commitment to diversity in the workplace. The new position in the agency’s Office of Human Resources reflects the SEC’s ongoing commitment to recruiting and retaining a highly qualified and broadly diverse workforce with different backgrounds, experiences, and views. Mr. Crawford is currently the Senior Associate Regional Director in the SEC’s Atlanta Regional Office. He will begin his new position next month, and will advocate diversity in recruitment, training, leadership and employee relations. Mr. Crawford also will work collaboratively with the SEC’s Office of Equal Employment Opportunity to develop strategic plans and coalitions to advance the SEC’s diversity and inclusion efforts. “As we look toward the future, a diverse and engaged staff will be our greatest asset and a critical component of our success,” said Jeffrey Risinger, Associate Executive Director of the Office of Human Resources. “Ron’s extensive experience in the Division of Enforcement and his numerous contributions to the agency’s diversity programs make him ideally suited for this challenging new role.” Mr. Crawford added, “At this critical juncture in the agency’s history, creating a more inclusive environment will give the SEC a competitive advantage as it seeks to attract and retain the highest caliber staff of professionals. I look forward to this challenge of further enhancing diversity at the SEC.” Mr. Crawford, who began working at the SEC in 1980 as a staff attorney in the Division of Enforcement, has worked in three regional offices and has had supervisory responsibilities for enforcement and examination programs. Since joining the SEC, Mr. Crawford has supervised and played an important role in the resolution of numerous high-profile enforcement cases. Mr. Crawford taught corporate law as an adjunct lecturer at the University of Pennsylvania’s Wharton School of Business from 1985 to 1987. He also was a member of the faculty at St. John’s University, where he was an assistant academic dean and the director and founder of the Institute of Ethnic and Urban Affairs. Mr. Crawford received his J.D. from Columbia University’s School of Law in 1980, a B.A. in mathematics from the University of Bridgeport, an M.A. in mathematics education from Colgate University, and a M.Ed. and Ed.D. in educational administration from Columbia University’s Teachers College, where he was a Ford Foundation Fellow. The SEC integrates diversity principles into every aspect of the agency’s operations and workplace culture. According to the agency’s FY 2008 EEO Status Report, nearly half of the SEC’s employees are female, approximately one-third belong to a minority group, and nearly 5 percent have a self-identified disability. Last year, the SEC became the first government agency to receive the Distinguished in Diversity Award from GAYLAW, the Gay, Lesbian, Bisexual and Transgender Attorneys of Washington. (Press Rel. 2009-158) ENFORCEMENT PROCEEDINGSSecurities and Exchange Commission Orders Hearing on Registration Revocation or Suspension Against Seven Public Companies for Failure to Make Required Periodic FilingsOn July 10, 2009, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of seven companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the seven issuers are delinquent in their required periodic filings with the Commission. In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-60291; File No. 3-13545) Securities and Exchange Commission Orders Hearings on Registration Revocation or Suspension Against Ten Public Companies for Failure to Make Required Periodic FilingsThe Commission today instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of ten companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the ten issuers are delinquent in their required periodic filings with the Commission. In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-60293; File No. 3-13546) State of Indiana Files Charges Against Former Officers of Alanar, Inc. Alleging Multi-Million Dollar, Faith-Based Affinity Fraud SchemeOn June 30, 2009, the State of Indiana filed charges against Vaughn A. Reeves, Sr.; Vaughn A. Reeves, Jr.; Jonathan Christopher Reeves; and Joshua Craig Reeves (collectively, the Reeves) for violations of the Indiana Securities Act. The felony charges against the Reeves concern their alleged participation in an affinity fraud investment scheme that raised at least $120 million from investors in church bonds. The Commission charged the Reeves with violations of the federal securities laws, in July 2005, based on related conduct. The State of Indiana alleged that the Reeves violated state securities laws by misusing money raised from the purchasers of church bonds sold through Alanar, Inc. (Alanar), an entity controlled by the Reeves. According to the State of Indiana, the Reeves’ scheme involved approximately 300 separate bond issuances that raised at least $120 million from investors. The State of Indiana alleged that the Reeves’ scheme was an affinity fraud in that Alanar’s marketing strategy was devised to appeal to the Christian faith of potential investors. The court papers filed in the state criminal prosecution alleged that the Reeves misused funds from certain bond issuances to conceal from investors the true rate of default on Alanar’s bonds. The State of Indiana further alleged that the Reeves received more than $6 million in ill-gotten gains from their actions. The Reeves were charged with 10 separate felony counts of violating the Indiana Securities Act and each of them could face up to eight years in prison per charge if convicted. In July 2005, the Securities and Exchange Commission filed a civil action against the Reeves and other defendants alleging, among other things, that the Reeves violated the antifraud provisions of the federal securities laws by misusing investor funds and improperly diverting investor funds to themselves and entities they controlled. The Commission further alleged that the Reeves’ scheme raised more than $120 million from investors in church bonds, including $50 million from investors in related bond funds. On July 26, 2005, the United States District Court for the Southern District of Indiana issued an Order of Permanent Injunction against the Reeves and various entities they controlled which, among other things, permanently enjoined the Reeves from violating the antifraud provisions of the federal securities laws, froze their assets, and appointed an independent monitor over the Reeves’ entities. In December 2005, the Court appointed a receiver over the Reeves’ entities. The Court subsequently approved a plan that provides for a distribution of funds to harmed investors through the Court-appointed receiver. On May 19, 2008, the Court entered final judgments against the Reeves which, among other things, required them to collectively pay more than $7.88 million in disgorgement, prejudgment interest and civil penalties. For additional information regarding the Commission’s case, see LR-19314 (July 27, 2005) and LR-20629 (June 25, 2008). For further information regarding the criminal prosecution of the Reeves, go to www.in.gov/sos/alanar or www.sullivancountyprosecutor.com/alanar-information. [SEC v. Alanar, Inc., et al., Civil Action No. 1:05-cv-01102 (S.D. Ind.) (Chief Judge David F. Hamilton)] (Rel. LR-21125) SEC Charges Seattle Attorney and Accomplices With Orchestrating Stock Dumping SchemeThe Securities and Exchange Commission today charged Seattle-based securities lawyer David Otto and several others with conducting a fraudulent "pump-and-dump" scheme in which they secretly unloaded more than $1 million in penny stock of a company touting a non-existent anti-aging product. The SEC alleges that a series of misleading press releases and Web profiles were used to tout purported beverages and nutritional supplements of Seattle-based MitoPharm Corporation. With claims that its products had anti-aging benefits from an ingredient extracted from a berry used in traditional Chinese medicine, MitoPharm's stock price more than quadrupled during the aggressive stock promotion campaign. However, the SEC alleges that MitoPharm's products were not "available" as advertised and were still in the developmental stage. Full-color photos featuring beverage cans and pill bottles were only mock-ups of non-existent products. The SEC's complaint, filed in federal court in Seattle, charges Otto, his associate Todd Van Siclen of Seattle, and Houston-based stock promoter Charles Bingham and his company Wall Street PR, Inc. MitoPharm and its CEO Pak Peter Cheung of Vancouver were also charged. According to the SEC's complaint, the scheme began in late 2006 when Otto, who was hired by Cheung, arranged to purchase a publicly traded shell company as a merger partner for MitoPharm. Otto and Van Siclen drafted opinion letters to MitoPharm's transfer agent filled with false statements in order to secure supposedly "freely tradable" stock certificates for individuals and entities secretly controlled by Otto. The SEC's complaint alleges that Cheung hired Bingham on Otto's recommendation, and they embarked on an aggressive public relations campaign that centered on the misleading promotion of two key products - "Restorade" and "Stamina Solutions" - that did not exist. They developed promotional materials that falsely stated that both Restorade and Stamina Solution are "[a]vailable as functional beverage or as a soft gel capsule." To accompany the written text of MitoPharm's Web site and other promotional materials, Cheung had a graphics artist create renderings of what the containers for MitoPharm's products could look like. Written materials and Web profiles created by Bingham and others were disseminated to investors with fake images and present-tense descriptions of the products. The SEC further alleges that as the promotional campaign caused the stock price to rise above $2.30, Otto sold his shares for more than $1 million and Bingham netted an additional $300,000. The massive selling of the stock caused the price to fall to a nickel per share by November 2007. The SEC's complaint alleges that all defendants violated Sections 5 and 17(a) of the Securities Act of 1933 and that Otto, Van Siclen, Cheung and MitoPharm violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The SEC's complaint also charges MitoPharm with violating Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder, and Otto with violating Section 16(a) of the Exchange Act and Rule 16a-3 thereunder. The SEC seeks injunctive relief, disgorgement and financial penalties from the defendants as well as penny stock bars for Otto, Van Siclen, and Cheung, and an officer-and-director bar against Cheung. [SEC v. David M. Otto, Todd Van Siclen, MitoPharm Corporation, Pak Peter Cheung, Wall Street PR, Inc., Charles Bingham, Case No. CV-09-0960 RAJ (WD Wa.)] (LR-21126) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change filed by the Chicago Board Options Exchange to amend its CBOE Stock Exchange (CBSX) Fees Schedule (SR-CBOE-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 July 6. (Rel. 34-60264) A proposed rule change filed by the Chicago Stock Exchange (SR-CHX-2009-06) adding the Voluntary De-Registration Rule 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 July 6. (Rel. 34-60268) A proposed rule change (SR-NYSEArca-2009-64) filed by NYSE Arca that extends the suspension of NYSE Arca’s stock price continued listing standard to July 31, 2009 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 July 6. (Rel. 34-60272) A proposed rule change (SR-NYSE-2009-64) filed by the New York Stock Exchange to extend its suspension of its dollar stock price continued listing standard to July 31, 2009 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 July 6. (Rel. 34-60273) A proposed rule change (SR-ISE-2009-48) filed by the International Securities Exchange relating to foreign currency options closing settlement values 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 July 6. (Rel. 34-60274) A proposed rule change filed by New York Stock Exchange (SR-NYSE-2009-67) extending a temporary equity transaction fee for shares executed on the NYSE MatchPointSM System 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 July 6. (Rel. 34-60278) Proposed Rule ChangesThe Commission issued notice of a proposed rule change submitted by the New York Stock Exchange (SR-NYSE-2009-60) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 in connection with the proposal of NYSE Euronext to require that at least three-fourths of its directors satisfy independence requirements. Publication is expected in the Federal Register during the week of July 6. (Rel. 34-60261) The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2009-058) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder to modify port fees. Publication is expected in the Federal Register during the week of July 6. (Rel. 34-60265) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2009/dig071309.htm
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