SEC News Digest

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.

The Open Meeting will be held in Room 10800 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 - Monday, November 2, 2009 - 10:00 a.m. - Room 10800

An open meeting will be held to hear oral argument on an appeal by Guy P. Riordan from an initial decision of an administrative law judge. The law judge found that, from around 1996 to December 2002, Riordan, a former registered representative associated with Wachovia Securities, LLC, in its Albuquerque, New Mexico, branch office, violated the antifraud provisions by making secret cash payments to the New Mexico State Treasurer in exchange for securities business from the Treasurer's Office. The law judge barred Riordan from associating with any broker or dealer; imposed a cease-and-desist order; ordered disgorgement of $1,017,278.78, plus prejudgment interest; and assessed a $500,000 third-tier civil penalty.

Among the issues likely to be argued are whether Riordan engaged in the conduct alleged, whether that conduct constituted securities fraud and, if so, the extent to which sanctions should be imposed.

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.

Closed Meeting - Tuesday, November 3, 2009 - 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Tuesday, Nov. 3, 2009, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; an adjudicatory matter; regulatory matters regarding financial institutions; and 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

In the Matter of William J. Reilly, Esq.

On Oct. 27, 2009, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against William J. Reilly, Esq. The Order finds that on Oct. 15, 2009, Reilly, an attorney licensed to practice in the State of New York, was permanently enjoining from future violations of Sections 5(a) and 5(c) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Based on that finding, the Order suspended Reilly from appearing or practicing before the Commission as an attorney, with the right to apply for reinstatement after three years. Reilly consented to the issuance of the Order without admitting or denying any of the findings against him except as to the entry of the injunction, which he admitted. (Rel. 34-60890; File No. 3-13666)

In the Matter of Mohit A. Khanna

On Oct. 27, 2009, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Mohit A. Khanna. The Order finds that on Oct. 6, 2009, a judgment was entered against Mohit A. Khanna, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, in the civil action entitled SEC v. Mohit A. Khanna, et al., Civil Action Number 09-CV-1784 BEN (POR) in the United States District Court for the Southern District of California.

The Order further finds that the Commission's complaint alleged that from 2003 to August 2009, Khanna made false and misleading statements in the unregistered offer and sale of the securities of MAK 1 Enterprises Group, LLC. In addition, the Order finds the complaint alleged Khanna falsely promised inflated and guaranteed returns, misrepresented that the investments were insured, concealed the bar imposed by the Financial Industry Regulatory Authority, misappropriated investor funds, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. Additionally, the Order finds that the complaint alleged that Khanna sold unregistered securities.

Based on the above, the Order bars Khanna from association with any broker or dealer. Khanna 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 him, the subject matter of these proceedings, and the entry of the judgment in the civil injunctive action. (Rel. 34-60891; File No. 3-13667)

In the Matter of Anthony Perez

On Oct. 28, 2009, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act), Making Findings, and Imposing Remedial Sanctions (Order) against Anthony Perez.

The Order finds that from July 2007 to May 2008, Anthony Perez was a registered representative associated with Goldman Sachs Group Inc. (Goldman Sachs), a broker-dealer registered with the Commission, and served as investment banking analyst in its financial institutions group in New York City. In March 2008, Anthony Perez began working on a potential acquisition of Safeco Corp. (Safeco) on behalf of a large Goldman Sachs client. From April 5, 2008 to April 21, 2008, Anthony Perez misappropriated material, nonpublic information concerning the potential acquisition of Safeco and tipped this confidential information to his brother, Ian C. Perez. Ian C. Perez bought Safeco call options on April 22, 2008, and sold them on April 23, 2008, for a realized profit of $152,231.10. On Sept. 15, 2009, a final judgment for injunctive relief against Anthony Perez was entered, by consent, in a civil action brought by the Commission charging him with violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Based on the above, the Order bars Anthony Perez from association with any broker or dealer with the right to reapply for association after five years to the appropriate self-regulatory organization, or if there is none, to the Commission. Anthony Perez consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-60892; File No. 3-13668)

SEC v. Rick J. Boros

The Commission announced that on Oct. 26, 2009, the Honorable Judge George W. Lindberg of the United States District Court for the Northern District of Illinois granted its motion and entered summary judgment against defendant Rick J. Boros (Boros), aka Vincent Kwiatkowski, finding that Boros violated the registration and anti-fraud provisions of the federal securities laws. Boros was permanently enjoined from violating Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act), Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. He was ordered to disgorge ill-gotten gains of $2,356,000 and pay prejudgment interest thereon of $339,348, and to pay two third-tier civil penalties of $130,000 each. The Court also entered judgment by default against North American Mining Ventures, Inc. (North American), the company that Boros controlled.

The Commission filed its complaint against Boros and North American on Sept. 3, 2008, alleging that from May 2005 to June 2007 they raised at least $1.2 million from at least 17 investors through the fraudulent offer and sale of investments in purported gold and silver mines in Mexico. Boros and North American falsely represented, both orally and in written offering materials, that these investments involved a "minimal amount of risk" and would be "very profitable." Boros thereafter deposited investors' money into North American bank accounts where he misappropriated essentially all of the funds for his personal use. After the Commission filed its complaint, North American moved to dismiss the suit arguing in part that the Defendants would soon pay off all of the investors. Boros thereafter raised an additional $1.1 million from another set of investors, claiming he would invest their money in a "high-yield" private placement trading program that would pay off within 30 days. Boros subsequently also misappropriated these investors' funds. The Court's final judgment in favor of the Commission orders Boros to disgorge the ill-gotten gains he misappropriated from both sets of investors in the total amount of $2,356,000, plus prejudgment interest, and to pay a $130,000 civil penalty for each of his fraudulent schemes. Boros currently is in prison awaiting sentencing on unrelated federal criminal charges. [SEC v. Rick J. Boros, Case No. 08-cv-5004 (N.D. Ill.)] (LR-21262A)

SEC Charges New Mexico Man with Misappropriating $45 Million Dollars

On Oct. 27, 2009, the Securities and Exchange Commission filed a civil injunctive action against Charles R. Kokesh for his role in defrauding at least 21,000 investors in four business development companies (BDCs) through a variety of schemes and contrivances.

The Commission's complaint alleges that from at least 1995 through July 2007, Kokesh controlled two now-defunct Commission-registered investment-adviser firms (Advisers), which in turn controlled and provided investment advice to the BDCs. The complaint also alleges that acting by and through the Advisers, Kokesh misappropriated approximately $45 million of investor funds by causing the BDCs to pay illegal distributions, performance fees, and expense reimbursements to the Advisers. The complaint further alleges that to conceal the scheme, Kokesh caused the Advisers to distribute misleading proxy statements to BDC investors and to file false Commission reports on behalf of the BDCs.

The Commission's complaint, filed in United States District Court in New Mexico, alleges that Kokesh violated Section 37, or in the alternative Section 57, of the Investment Company Act, and aided and abetted violations of Sections 13(a) and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 14a-9 thereunder, and Sections 205, 206(1) and 206(2) of the Investment Advisers Act.

The Commission seeks a permanent injunction against further violations of the securities laws, disgorgement plus prejudgment interest, and civil money penalties. [SEC v. Charles R. Kokesh Civil Action No. 6:09-cv-1021 (D.N.M.)] (LR-21264)

INVESTMENT COMPANY ACT RELEASES

Charles Schwab Investment Management, Inc., et al.

An order has been issued on an application filed by Charles Schwab Investment Management, Inc., et al. The order permits (a) certain open-end management investment companies and their series to issue shares (Shares) redeemable only in large aggregations (Creation Units); (b) secondary market transactions in Shares to occur at negotiated prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares. (Rel. IC-28983 - October 23)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2009-91) relating to the expansion and extension of the Exchange's Penny Pilot Program 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 October 26. (Rel. 34-60873)

A proposed rule change filed by The NASDAQ Stock Market (SR-NASDAQ-2009-091) relating to the expansion and extension of the Exchange's Penny Pilot Program 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 October 26. (Rel. 34-60874)

A proposed rule change filed by The NASDAQ Stock Market (SR-NASDAQ-2009-090) to permit listing option series that are restricted to closing transactions if such series are listed and restricted to closing transactions on another national securities exchange 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 October 26. (Rel. 34-60880)

SECURITIES ACT REGISTRATIONS

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RECENT 8K FILINGS

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