SEC News Digest

ENFORCEMENT PROCEEDINGS

In the Matter of Applied Wellness Corp.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registration by Default (Default Order) in Applied Wellness Corp., Administrative Proceeding No. 3-13707. The Order Instituting Proceedings (OIP) alleged that, while its securities were registered with the Securities and Exchange Commission, Respondent Applied Wellness Corporation (Applied Wellness) failed to file an annual report for its fiscal year ended Dec. 31, 2008, and failed repeatedly to file required quarterly reports since its fiscal quarter ended March 31, 2008. The OIP further alleged that Applied Wellness failed to make required disclosures in its annual report for fiscal year ended Dec. 31, 2007, concerning its internal control over financial reporting and disclosure controls and procedures, while its securities were registered with the Commission. The Default Order finds these allegations to be true and revokes the registration of each class of registered securities of Applied Wellness Corporation, pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-61344; AAE Rel. 3103; File No. 3-13707)

In the Matter of John M. Adams

On Jan. 14, 2010, the Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against John M. Adams, an inmate at the Federal Correctional Institution in Morgantown, West Virginia, based on the entry of a permanent injunction against him in the civil action entitled Securities and Exchange Commission v. U.S. Reservation Bank & Trust, et al., Civil Action No. 02-0581 PHX (EHC) in the United States District Court for the District of Arizona, Phoenix Division.

The Division of Enforcement (Division) alleges that, on Sept. 25, 2006, a judgment was entered against Adams, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The Division further alleges in the Order that the Commission's complaint in the civil action alleged, among other things, that, from at least September 2001 through at least April 2002, Adams, along with a company he controlled called Higher Investments Technologies, Inc., engaged in a fraudulent securities offering that defrauded investors of approximately $10.6 million.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Adams an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest, pursuant to Section 15(b) of the Securities Exchange Act of 1934.

The Order directed that an Administrative Law Judge shall issue an initial decision no later than 210 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-61352; File No. 3-13744)

In the Matter of Edward J. Driving Hawk, Sr.

On Jan. 14, 2010, the Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Edward J. Driving Hawk, Sr., an inmate at the Federal Correctional Institution in Terminal Island, California, based on the entry of a permanent injunction against him in the civil action entitled Securities and Exchange Commission v. U.S. Reservation Bank & Trust, et al., Civil Action No. 02-0581 PHX (EHC) in the United States District Court for the District of Arizona, Phoenix Division.

In the Order, the Division of Enforcement alleges that, on Sept. 25, 2006, a judgment was entered against Driving Hawk, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Division of Enforcement further alleges in the Order that the Commission's complaint in the civil action alleged, among other things, that, From 1992 through at least April 2002, Driving Hawk, along with a company he controlled called U.S. Reservation Bank & Trust, engaged in a fraudulent securities offering that defrauded investors of approximately $78 million.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Driving Hawk an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest, pursuant to Section 15(b) of the Securities Exchange Act of 1934.

The Order directed that an Administrative Law Judge shall issue an initial decision no later than 210 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-61353; File No. 3-13745)

In the Matter of Emund J. Smedley

On Jan. 14, 2010, the Commission announced the issuance of 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 Edmund J. Smedley, a resident of Harrison, Ohio. The Order finds that, on Sept. 25, 2006, a judgment was entered against Smedley, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(b) of the Exchange Act and Rule 10b-5 promulgated thereunder in the civil action captioned Securities and Exchange Commission v. U.S. Reservation Bank & Trust, et al., Civil Action No. 02-0581 PHX (EHC), in the United States District Court for the District of Arizona, Phoenix Division. The order further finds that the Commission's complaint in the civil action alleged that Smedley, in concert with multiple other defendants, defrauded at least 20 individual investors and investor groups of at least $78 million in a fraudulent Ponzi scheme from March 2000 through April 3, 2002.

Based on the above, the Order bars Smedley from association with any broker or dealer. Smedley consented to the issuance of the Order without admitting or denying any of the findings except as to the entry of the judgment. (Rel. 34-61354; File No. 3-13746)

In the Matter of Leo R. Driving Hawk, Sr.

On Jan. 14, 2010, the Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Leo R. Driving Hawk, Sr., a resident of Gilbert, Arizona, based on the entry of a permanent injunction against him in the civil action entitled Securities and Exchange Commission v. U.S. Reservation Bank & Trust, et al., Civil Action No. 02-0581 PHX (EHC) in the United States District Court for the District of Arizona, Phoenix Division.

In the Order, the Division of Enforcement alleges that, on Feb. 21, 2007, a judgment was entered against Driving Hawk, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Division of Enforcement further alleges in the Order that the Commission's complaint in the civil action alleged, among other things, that, from at least November 2001 through at least April 2002, Driving Hawk engaged with others in a fraudulent securities offering that defrauded investors of approximately $78 million.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Driving Hawk an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest, pursuant to Section 15(b) of the Securities Exchange Act of 1934.

The Order directed that an Administrative Law Judge shall issue an initial decision no later than 210 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-61355; File No. 3-13747)

In the Matter of Thomas T. Emerton, III

On Jan. 14, 2010, the Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Thomas T. Emerton, III, a resident of New Port Richey, Florida, based on the entry of a permanent injunction against him in the civil action entitled Securities and Exchange Commission v. U.S. Reservation Bank & Trust, et al., Civil Action No. 02-0581 PHX (EHC) in the United States District Court for the District of Arizona, Phoenix Division.

In the Order, the Division of Enforcement alleges that, on Nov. 2, 2006, a judgment was entered against Emerton, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Division of Enforcement further alleges in the Order that the Commission's complaint in the civil action alleged, among other things, that, from at least March 2000 through at least April 2002, Emerton, along with a company he controlled called Global-Link Capital Markets, Ltd., engaged in a fraudulent securities offering that defrauded investors of approximately $78 million.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Emerton an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest pursuant to Section 15(b) of the Securities Exchange Act of 1934.

The Order directed that an Administrative Law Judge shall issue an initial decision no later than 210 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. 34-61356; File No. 3-13748)

Court Enters Final Judgments of Permanent Injunction and Other Relief Against Mammen P. Zachariah and Sheldon Nassberg

The Securities and Exchange Commission announced that on Dec. 16, 2009, the Honorable Linnea R. Johnson, United States Magistrate Judge for the Southern District of Florida, entered Final Judgments of Permanent Injunction and Other Relief against Defendants Mammen P. Zachariah (Mammen) and Sheldon Nassberg. The final judgments enjoin Mammen and Nassberg from violating Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. In addition, the Court is requiring Mammen to pay disgorgement of $135,747, plus prejudgment interest of $8,106, and a civil penalty of $135,747, and Nassberg to pay disgorgement of $25,571, plus prejudgment interest of $1,526, and a one-time civil penalty of $25,571. Both Mammen and Nassberg consented to the entry of the final judgments without admitting or denying any of the allegations in the complaint.

The Commission commenced this action on May 12, 2008, by filing its complaint against Zachariah P. Zachariah (Zachariah), Mammen and Nassberg, alleging that Zachariah engaged in illegal insider trading based on his trading on material, nonpublic information in the securities of IVAX Corporation and Correctional Services Corporation. The Commission further alleged that Zachariah provided inside information relating to IVAX and Correctional Services to Mammen and Zachariah gave Nassberg inside information relating to Correctional Services. The Commission's case against the remaining defendant, Zachariah, will go to trial in August 2010. [SEC v. Zachariah P. Zachariah, et al., Civil Action No. 08-60698-CIV-JOHNSON] (LR-21378)

INVESTMENT COMPANY ACT RELEASES

Orders of Deregistration Under the Investment Company Act

Orders have been issued under Section 8(f) of the Investment Company Act declaring that each of the following has ceased to be an investment company:

• ING Clarion Real Estate Income Fund [File No. 811-21404][Rel. No. IC-29111]
• BGT Subsidiary Inc. [File No. 811-8949][Rel. No. IC-29112]
• BNN Subsidiary Inc. [File No. 811-7719][Rel. No. IC-29113]
• BBT Subsidiary Inc. [File No. 811-7721][Rel. No. IC-29114]
• Keystone America Hartwell Emerging Growth Fund, Inc. [File No. 811-1633][Rel. No. IC-29115]
• Master Reserves Trust [File No. 811-2597][Rel. No. IC-29116]
• Keystone Mid Cap Growth Fund (S-3) [File No. 811-100][Rel. No. IC-29117]
• B.B. Funds [File No. 811-7921][Rel. No. IC-29118]
• Prospect Street Income Shares Inc. [File No. 811-2365][Rel. No. IC-29119]
• DWS Investment Portfolios [File No. 811-7774][Rel. No. IC-29120]
• DWS International Equity Portfolio [File No. 811-6702][Rel. No. IC-29121]
• Treasury Money Portfolio [File No. 811-6072][Rel. No. IC-29122]

Paul Revere Variable Annuity Contract Accumulation Fund

An order has been issued pursuant to Section 8(f) of the Investment Company Act declaring that Paul Revere Variable Annuity Contract Accumulation Fund has ceased to be an investment company. (Rel. IC- 29123 - January 13)

SELF-REGULATORY ORGANIZATIONS

Approval of Proposed Rule Change

The Commission approved a proposed rule change (SR-FINRA-2009-080) submitted under Rule 19b-4 of the Securities Exchange Act of 1934 by the Financial Industry Regulatory Authority to adopt FINRA Rule 4570 (Custodian of Books and Records) in the Consolidated FINRA Rulebook. Publication is expected in the Federal Register during the week of January 18. (Rel. 34-61332)

SECURITIES ACT REGISTRATIONS

• Latest Securities Act registrations (TXT)

RECENT 8K FILINGS

• Latest 8-K filings (TXT)

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