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.

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 - January 27, 2010 - 10:00 a.m.

The subject matter of the Open Meeting will be:

Item 1: The Commission will consider a recommendation to adopt new rules, rule amendments, and a new form under the Investment Company Act of 1940 governing money market funds, to increase the protection of investors, improve fund operations, and enhance fund disclosures.

Item 2: The Commission will consider a recommendation to publish an interpretive release to provide guidance to public companies regarding the Commission's current disclosure requirements concerning matters relating to climate change.

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.

Fredric D. Firestone, Associate Director of Enforcement, to Leave SEC

The Securities and Exchange Commission today announced that Fredric D. Firestone, an Associate Director of the Division of Enforcement, will leave the SEC next month to become a partner at McDermott, Will & Emery, resident in the firm's Washington, D.C., office.

During his tenure of more than 12 years at the SEC, Mr. Firestone has overseen investigations and enforcement actions in all major program areas. He has spearheaded the SEC's investigations involving the collapse of the Auction Rate Securities (ARS) market. The ARS settlements reached with multiple financial services firms resulted in the return of more than $50 billion to tens of thousands of harmed investors - the largest financial remedy in the history of the Commission. Mr. Firestone also oversaw significant enforcement actions and settlements in the Enron and WorldCom matters.

"Rick is a first-rate talent whose commitment to the SEC's mission is in the finest tradition of senior officers in the Enforcement Division," said Robert Khuzami, Director of the SEC's Division of Enforcement. "His contributions to the Division's successes are many, and he will be sorely missed."

Mr. Firestone said, "It has been an honor and privilege to work with the dedicated and talented professionals at the Commission. I am particularly grateful to my colleagues in the Division of Enforcement who work tirelessly to protect investors. They represent the best in law enforcement. They are zealous and tough yet treat everyone fairly, and enforce the law with intelligence and compassion."

Mr. Firestone, 49, joined the SEC staff in June 1997 as a Staff Attorney in the Division of Enforcement. He became a Branch Chief in 1999, an Assistant Director in 2003, and an Associate Director in 2006.

In July 2009, Mr. Firestone received the SEC's Stanley Sporkin Award, an honor that recognizes those who have made exceptionally tenacious and insightful contributions to the enforcement of the federal securities laws. Prior to joining the SEC, Mr. Firestone was in private practice and also served as a Judge Advocate in the United States Navy where he tried numerous courts-martial. He earned both his undergraduate and law degrees from Washington University in St. Louis. (Press Rel. 2010-9)

ENFORCEMENT PROCEEDINGS

In the Matter of Planet Entertainment Corp.

An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default (Default Order) in Planet Entertainment Corp., Administrative Proceeding No. 3-13692. The Order Instituting Proceedings alleged that eleven Respondents failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true. It revokes the registrations of each class of registered securities of Planet Entertainment Corp., Polifly Financial Corp., Pope Evans & Robbins, Inc., Power Designs, Inc., Prime Motor Inns LP, Pro Net Link Corp., Prospect Group, Inc., Prospect Park Financial Corp., Providence Capital II, Inc. (n/k/a Lifelong.com, Inc.), Pudgie's Chicken, Inc., and PVAXX Corp. pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-61380; File No. 3-13692)

In the Matter of Gerald P. Alexander

On Jan. 20, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Gerald P. Alexander, a resident of Alpharetta, Georgia. In the Order, the Division of Enforcement alleges that a final judgment was entered by default against Alexander in the civil action entitled Securities and Exchange Commission v. Gerald P. Alexander, et al., Civil Action Number 1:09-CV-0805 in the United States District Court for the Northern District of Georgia. The Commission's complaint in the civil case alleged that, from at least March 2006 through March 2008, Alexander, acting on behalf of and through two corporations that he controlled, offered and sold shares of stock of at least thirteen corporations to investors in numerous transactions, when no registration statements were filed or in effect with the Commission for the transactions and no exemption from registration was available. The complaint also alleged that Alexander and his corporations engaged in a regular business of buying and selling securities for their own accounts when they were not registered as dealers with the Commission. The complaint alleged that as a result of this conduct, Alexander violated Sections 5(a) and 5(c) of the Securities Act, which prohibit the public offer and sale of securities when no registration statements is filed or in effect, and Section 15(a) of the Exchange Act, which prohibits a dealer from engaging in securities transactions without being registered with the Commission as a broker-dealer or being associated with a registered broker-dealer. The district court entered an injunction against Alexander prohibiting him from future violations of those provisions.

Based on the allegations listed above, the Order provides that a public hearing shall be convened to determine whether the allegations in the Order are true and what, if any, remedial action is appropriate in the public interest against Alexander. (Rel. 34-61382; File No. 3-13753)

In the Matter of Theodore P. Noncek

On Jan. 20, 2010, the Commission issued an Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against Theodore P. Noncek, the former Controller for Bally Total Fitness Holding Corporation (Bally). The Order suspends Noncek from appearing or practicing before the Commission as an accountant, based on the entry of a Final Judgment against Noncek permanently enjoining him from future violations of certain provisions of the federal securities laws.

The Order finds that on Dec. 17, 2009, the Commission filed a complaint in the United States District Court for the District of Columbia alleging that Noncek was, with others, responsible for Bally's materially false and misleading statements about its financial condition in filings with the Commission and in other public statements, and that these materially false and misleading statements portrayed Bally's financial condition (its net worth) and its performance (its income) as being materially better than they actually were during the relevant period.

The Commission also finds that Noncek was Bally's Controller from 2001 to February 2005, when he was terminated, and was a certified public accountant at all relevant times.

In the Order, the Commission further finds that, on Dec. 22, 2009, the District Court entered a Final Judgment permanently enjoining Noncek from violating Sections 17(a)(2) and (3) of the Securities Act of 1933, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.

Noncek consented to the entry of the Order without admitting or denying the findings contained therein except those findings specifically identified as admitted in the Order. After two years from the date of the Order, Noncek may request that the Commission consider an application to allow him to resume appearing or practicing before the Commission. (Rel. 34-61383; File 3-13754)

In the Matter of John W. Dwyer

On Jan. 20, 2010, the Commission issued an Order Instituting Public Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions (Order) against John W. Dwyer, the former Chief Financial Officer for Bally Total Fitness Holding Corporation (Bally). The Order suspends Dwyer from appearing or practicing before the Commission as an accountant, based on the entry of a Final Judgment against Dwyer permanently enjoining him from future violations of the antifraud and other provisions of the federal securities laws.

The Order finds that on Dec. 17, 2009, the Commission filed a complaint in the United States District Court for the District of Columbia alleging that Dwyer was responsible for Bally's materially false and misleading statements about its financial condition in filings with the Commission and in other public statements, and that these materially false and misleading statements portrayed Bally's financial condition (its net worth) and its performance (its income) as being materially better than they actually were during the relevant period.

The Commission also finds that Dwyer was Bally's CFO from May 1994 to April 2004, when he was forced to resign, and was a certified public accountant at all relevant times.

In the Order, the Commission further finds that, on Dec. 22, 2009, the District Court entered a Final Judgment permanently enjoining Dwyer from violating Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.

Dwyer consented to the entry of the Order without admitting or denying the findings contained therein except those findings specifically identified as admitted in the Order. (Rel. 34-61384; File 3-13755)

In the Matter of Deanna J. Seruga, CPA

On Jan. 20, 2010, 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 Deanna J. Seruga. The Order finds that Seruga was permanently enjoined, by consent, from future violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13b2-1 and 13b2-2(b) thereunder, and aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. The Order is based on a Final Judgment entered against her on Jan. 4, 2010, in the United States District Court for the Western District of Pennsylvania, in a civil action entitled Securities and Exchange Commission v. Richard E. McDonald, et al., Civil Action Number 09-CV-1685.

The Order finds that from 2003 until August 2005, Seruga was the Controller of World Health Alternatives, Inc., a medical staffing business with its principal place of business in Pittsburgh, Pennsylvania. Seruga was licensed as a certified public accountant in Pennsylvania while she was employed at World Health. The Order also finds that the Commission's complaint alleged, among other things, that Seruga, at the direction of World Health's former President and Chief Executive Officer and on her own accord, engaged in a fraudulent scheme that resulted in World Health filing materially false and misleading financial statements in the company's annual and quarterly reports from the first quarter of 2003 through the first quarter of 2005. The complaint alleged that Seruga falsified World Health's books and records by, among other things, understating expenses and liabilities through numerous false and improper accounting entries. In addition, the complaint alleged that Seruga knowingly provided false information to World Health's auditors.

Based on the above, the Order suspends Seruga from appearing or practicing before the Commission as an accountant. Seruga consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the entry of the Final Judgment, which she admitted. (Rel. 34-61385; AAE Rel. 3107; File No. 3-13756)

In the Matter of Joseph I. Emas

On Jan. 20, 2010, 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 Joseph I. Emas. The Order finds that Emas was permanently enjoined, by consent, from future violations of Sections 5(a), 5(c), 17(a)(2) and 17(a) (3) of the Securities Act of 1933. The Order is based on a Final Judgment entered against him on Jan. 4, 2010, in the United States District Court for the Western District of Pennsylvania, in a civil action entitled Securities and Exchange Commission v. Richard E. McDonald, et al., Civil Action No. 09-CV-1685.

The Order finds that from April 2004 until August 2005, Emas was the outside securities counsel to World Health Alternatives, Inc., a medical staffing business with its principal place of business in Pittsburgh, Pennsylvania. Emas is an attorney licensed to practice law in Florida, New York, and New Jersey. The Order also finds that the Commission's complaint alleged that Emas drafted and filed two post-effective amendments and a supporting legal opinion that he knew or should have known contained false statements concerning the registration of millions of shares of World Health stock; and sold World Health securities when no registration statement was filed or in effect and no exemption from registration applied.

Based on the above, the Order suspends Emas from appearing or practicing before the Commission as an attorney, with the right to apply for reinstatement after two years from the date of the Order. Emas consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the entry of the Final Judgment, which he admitted. (Rel. 34-61386; File No. 3-13757)

Court Finds Jamie L. Solow in Contempt for Failure to Pay SEC Judgment and Orders That He Surrender to the Custody of the U.S. Marshals to Be Incarcerated Until Such Time As He Complies With the Court's Order to Pay.

The Commission announced that on Jan. 15, 2010, the Honorable Donald M. Middlebrooks of the U.S. District Court for the Southern District of Florida found Jamie L. Solow in contempt of court for failing to pay disgorgement and prejudgment interest of over $3.4 million ordered to be paid in a securities fraud case brought against him by the SEC. The sanction for Solow's contempt is that on January 25, 2010, he must report to the U.S. Marshal's Office to be taken into custody and incarcerated until he complies with the Court's order to pay.

Following a nine-day trial in January 2008, a jury found Solow liable for violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act of 1933 (Securities Act), and for aiding and abetting violations of the net capital, books and records, and reporting provisions committed by one of his former firms, Archer Alexander Securities Corp. (Archer Alexander). The Commission's complaint alleged that in 2003, while associated with Archer Alexander, Solow engaged in a fraudulent trading scheme involving inverse floating rate collateralized mortgage obligations (inverse floaters), a highly complex, risky, and volatile type of mortgage-backed security derivative. The Commission's complaint also alleged that during 2003 to 2006, while associated with Archer Alexander and another registered broker, dealer, SAMCO Financial Services, Inc., Solow sold inverse floaters to retail investors with conservative to moderate investment objectives or low net worth for whom these complicated, volatile, and risky securities were unsuitable. Many of Solow's customers, including numerous elderly or retired investors, incurred heavy or total losses when they liquidated their accounts or were unable to meet margin calls involving the inverse floaters.

In its Order of Civil Contempt, the Court found that rather than pay the amounts ordered to be paid in the final judgment entered against him, Solow engaged in a purposeful campaign of asset dissipation by transferring his assets to his wife between the month his jury trial commenced through several months after the jury's verdict against him. Solow and his wife liquidated securities accounts totaling over $1.5 million. Some of those funds were used to pay "asset protection attorneys." Solow also signed a $5.2 million mortgage on his residence in Hillsboro Beach, the proceeds of which were used to fund a CD now held by a Cook Islands trust for the benefit of Mrs. Solow. Notwithstanding these transfers, Solow claims to be a "ward of his wife" even though the Solows' accumulated wealth has been derived exclusively from income earned by Mr. Solow alone. Finding that Mr. Solow's inability to pay the judgment was self-created, the Court noted that "Solow still lives a luxurious lifestyle, enjoying the benefits of the money he has made over the years, yet he refuses to repay the victims of his fraud. Such a situation cannot stand." [United States Securities and Exchange Commission v. Jamie L. Solow, Civil Action No. 06-81041-CIV-Middlebrooks/Johnson (S.D. Fla.)] (LR-21382)

SEC Files Settled Insider Trading Charges Against Boston-Based Mutual Fund Insider

The Securities and Exchange Commission filed a settled enforcement action today in U.S. District Court for the District of Massachusetts, charging Charles J. Marquardt with insider trading in the shares of the Evergreen Ultra Short Opportunities Fund (Ultra Fund), a mutual fund that invested primarily in mortgage-backed securities. At the time of his trading, Marquardt was the Senior Vice President and Chief Administrative Officer for operations of Boston-based Evergreen Investment Management Company, LLC (Evergreen), the investment adviser to the Ultra Fund. Among other things, Marquardt has agreed to pay approximately $40,000 to settle the charges.

The Commission's complaint alleges that, on June 11, 2008, Marquardt learned that the Ultra Fund might soon reduce the value it assigned to several of its mortgage-backed securities holdings, a move that would likely decrease the Fund's per-share net asset value (NAV) and might cause the Fund to close. The complaint further alleges that, on the next day, June 12, 2008, Marquardt redeemed all of his Ultra Fund shares and caused a family member to do the same. Over the next several days, the Fund did, in fact, decrease the value it assigned to its holdings, triggering significant reductions of the Fund's NAV. On June 19, 2008, Evergreen publicly announced that the Ultra Fund would be liquidated. The Commission's complaint alleges that, by redeeming their Ultra Fund shares prior to the closing of the Fund on June 19, Marquardt and his family member avoided losses of approximately $4,803 and $14,304, respectively.

To settle the Commission's charges, Marquardt consented, without admitting or denying the allegations in the Commission's complaint, to the entry of a final judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Marquardt also agreed to pay $19,107 in disgorgement, representing the losses that he and his family member avoided, $1,242 in prejudgment interest, and a $19,107 civil penalty. In separate administrative proceedings to be instituted after the entry of the permanent injunctions, Marquardt has also consented to be barred from association with any broker, dealer or investment adviser, with a right to reapply after two years.

The Commission's action against Marquardt follows the Commission's enforcement action against Evergreen and an affiliated distributor, filed in June 2009, in which the Commission charged Evergreen with violating the federal securities laws in connection with, among other things, overvaluing holdings in the Ultra Fund from February 2007 to June 2008. Evergreen agreed to pay more than $40 million to settle those charges.

The SEC's investigation is ongoing. For further information, see Securities Act Release No. 60059 (June 8, 2009). [SEC v. Charles J. Marquardt, Civil Action No. 10-10073, USDC, D.Mass.] (LR-21383)

SEC Charges General Re Corporation for Role in AIG and Prudential Accounting Frauds

The Securities and Exchange Commission today charged General Re Corporation for its involvement in separate schemes by American International Group and Prudential Financial, Inc. to manipulate and falsify their reported financial results.

The complaint alleges that a foreign subsidiary of Gen Re entered into two sham "reinsurance" transactions with AIG in 2000 to improperly allow AIG to reverse the declining reserve trend and falsely report additions to both loss reserves and premiums written. Senior officials at Gen Re helped AIG structure the two sham transactions. The contracts show reinsurance transactions that appeared to transfer risk to AIG, but the transactions did not transfer risk.

The complaint further alleges that Gen Re separately entered into a series of sham reinsurance contracts with Prudential's property and casualty division from 1997 to 2002. The contracts had no economic substance and purpose other than to allow Prudential to build up and then draw down on an off-balance sheet asset or "finite bank" parked with Gen Re. As a result of the sham transactions, Prudential improperly recognized more than $200 million in revenues in 2000, 2001, and 2002. Gen Re received fees totaling $8.1 million for structuring and executing the scheme with Prudential.

Without admitting or denying the allegations in the complaint, Gen Re has consented to a judgment enjoining it from aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and directing it to pay $12.2 million in disgorgement and prejudgment interest. The settlement is subject to court approval.

In determining to accept Gen Re's settlement offer, the SEC took Gen Re's remediation efforts and cooperation into account. Among the efforts SEC considered: Gen Re's comprehensive, independent review of its operations conducted at the outset of the government's investigations the results of which were shared with investigators; Gen Re's substantial assistance in the government's successful civil and criminal actions against individuals involved in the scheme with AIG; and Gen Re's internal corporate reforms designed to strengthen oversight of its operations. Those reforms entail dissolving a subsidiary involved with the AIG transactions, appointing an independent director to its Board of Directors, forming a committee consisting of senior managers to review and approve complex transactions, requiring legal review of proposed finite or loss mitigation contracts, and fortifying its internal audit functions and underwriting rules.

The SEC previously charged AIG with securities fraud and improper accounting, and the company settled the charges by paying more than $800 million among other remedies. The SEC also previously charged AIG former chairman Maurice R. "Hank" Greenberg and former chief financial officer Howard I. Smith, as well as former senior executives of Gen Re for their roles in connection with the scheme with AIG. The Commission separately charged Prudential with securities laws violations in 2008. [SEC v. General Re Corporation, Civil Action No. 10 Civ. 458 (S.D.N.Y.)] (LR-21384; AAE Rel. 3108)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by The NASDAQ Stock Market to amend Rule 2342 to reflect changes to corresponding FINRA rule (SR-NASDAQ-2010-001) 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 January 18. (Rel. 34-61320)

A proposed rule change filed by The NASDAQ Stock Market to amend Rule 2810 to reflect changes to corresponding FINRA rule (SR-NASDAQ-2010-002) 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 January 18. (Rel. 34-61321)

A proposed rule change filed by The NASDAQ Stock Market to amend Rule 2240 and 2250 to reflect changes to corresponding FINRA rules (SR-NASDAQ-2009-116) 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 January 18. (Rel. 34-61323)

A proposed rule change (SR-CBOE-2009-103) filed by the Chicago Board Options Exchange relating to temporary membership status and interim trading permit access fees 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 January 18. (Rel. 34-61369)

A proposed rule change filed by The NASDAQ Stock Market to amend Rules 3330 and 9810 to reflect changes to corresponding FINRA rules (SR-NASDAQ-2010-005) 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 January 18. (Rel. 34-61371)

Approval of Proposed Rule Change

The Commission approved a proposed rule change filed by the International Securities Exchange (SR-ISE-2009-87) relating to Foreign Currency Options. Publication in the Federal Register is expected during the week of January 18. (Rel. 34-61368)

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