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RULES AND RELATED MATTERSProposed Amendments to Rule 10b-18's "Safe Harbor" Regarding Issuer RepurchasesThe Commission today issued a release proposing amendments to Rule 10b-18 under the Securities Exchange Act of 1934. Rule 10b-18 provides issuers with a safe harbor from liability for manipulation if they repurchase their common stock in the open market in accordance with the rule's manner, time, price, and volume conditions. The proposed amendments are intended to update the rule's provisions to reflect market developments since the rule's adoption including:
ENFORCEMENT PROCEEDINGSCommission Revokes Registration of Securities of Leonidas Films, Inc. (n/k/a Consolidated Pictures Group, Inc.) for Failure to Make Required Periodic FilingsOn Jan. 26, 2010, the Commission revoked the registration of each class of registered securities of Leonidas Films, Inc. (n/k/a Consolidated Pictures Group, Inc.) (CPGU) 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, CPGU 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 Leonidas Films, Inc. (n/k/a Consolidated Pictures Group, 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 CPGU's securities pursuant to Section 12(j) of the Exchange Act. This order settled the charges brought against CPGU in In the Matter of Customer Sports, Inc., et al., Administrative Proceeding File No. 3-13698. 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 Customer Sports, Inc., et al., Administrative Proceeding File No. 3-13698, Exchange Act Release No. 61063 (Nov. 25, 2009). (Rel. 34-61418; File No. 3-13698) In the Matter of Registration Statement of Tsukuda-America Inc.On Jan. 26, 2010, the Commission issued an Order Instituting Proceedings Pursuant to Section 8(d) of the Securities Act of 1933 And Notice of Hearing (Order) against Tsukuda-America Inc. (Tsukuda). The Division of Enforcement alleges, as set forth in the Statement of Matters of the Division of Enforcement (Statement) incorporated by reference in the Order, that the registration statement includes untrue statements of material fact and omits material facts as required by the Commission's forms and regulations governing the offer and sale of securities to the public. For example, the Statement alleges that the registration statement includes: (1) the false representation that Weinberg & Company, P.A. (Weinberg), an accounting firm, audited, and prepared an audit report upon, the financial statements of Tsukuda, and that Weinberg consented to the inclusion of the audit report in Tsukuda's registration statement; and (2) the omission to disclose that the audit report and consent were not legitimate. The Commission instituted these proceedings pursuant to Section 8(d) of the Securities Act to determine whether the allegations of the Division of Enforcement are true; to afford registrant with an opportunity to establish any defenses to these allegations; and to determine whether a stop order should be issued suspending the effectiveness of Tsukuda's registration statement. A hearing is scheduled to commence at 10:00 a.m. on February 9, 2010 before an Administrative Law Judge to determine whether a stop order should be issued to suspend the effectiveness of Tsukuda's registration statement. Based on the above, the Order requires the Administrative Law Judge to issue an initial decision no later than 60 days from the date of service of the Order, pursuant to Rule 100(c) of the Commission's Rules of Practice. (Rel. 33-9102; File No. 3-13761) In the Matter of Anthony MartinAn Administrative Law Judge has issued an Initial Decision in Anthony Martin, Administrative Proceeding No. 3-13588. The Initial Decision finds that Anthony Martin was found guilty by a jury of conspiracy to commit securities fraud in violation of 18 U.S.C. S 371, and securities fraud in violation of 15 U.S.C. SS 78j(b), 78ff, and 17 C.F.R. S 240.10b-5 in the United States District Court for the Southern District of New York (district court). The district court entered a judgment and sentenced Anthony Martin to fifty-seven months in prison and two years supervised release. The Initial Decision concludes that, pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, it is in the public interest to bar Anthony Martin from association with any broker, dealer, or investment adviser. (Initial Decision No. 393; File No. 3-13588) Commission Orders Hearings on Registration Revocation Against Ten Public Companies for Failure to Make Required Periodic FilingsOn Jan. 26, 2010, 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 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 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. 34-61420; File No. 3-13762) In the Matter of Palmyra Capital Advisors L.L.C.On Jan. 26, 2010, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 21C of the Securities Exchange Act of 1934 (Exchange Act) and 203(e) of the Investment Advisers Act of 194021C of the Securities Exchange Act of 1934 (Exchange Act), Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Palmyra Capital Advisors L.L.C. (Palmyra). The Order finds that Palmyra, a registered investment adviser at the time of the misconduct, violated Rule 105 of Regulation M of the Exchange Act (Rule 105), which prohibits short selling securities during a restricted period (generally defined as five business days before the pricing of a secondary offering) and then purchasing the same securities in a public secondary offering. The Order instituted against Palmyra finds that Palmyra, through three of its managed hedge funds, violated Rule 105 in connection with short sales made in advance of a public offering by Capital One Financial Corp. (Capital One), resulting in profits of $225,500. Specifically, Palmyra sold short a total of 50,000 shares of Capital One on Sept. 18, 2008 and then received 50,000 shares from Capital One's secondary offering on Sept. 24, 2008. This is one of the first cases filed by the Commission for violations of the amended Rule 105 that became effective on Oct. 9, 2007. Based on the above conduct, the Order censures Palmyra, orders Palmyra to cease and desist from committing or causing any violations or any future violations Rule 105, finds that Palmyra willfully violated Rule 105, and orders Palmyra to pay $225,500 in disgorgement, $10,901.58 in prejudgment interest and $105,000 in civil money penalty. Palmyra consented to the issuance of the Order without admitting or denying any of the findings contained therein except for the Commission's jurisdiction over Palmyra and the subject matter. (Rels. 34-61421; IA-2976; File No. 3-13763) In the Matter of AGB Partners LLC, Gregory A. Bied, and Andrew J. GoldbergerOn Jan. 26, 2010, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 and Sections 203(e) and 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions and a Cease-and Desist Order (Order). The Order finds that in April 2007 and June 2008, AGB Partners, Bied and Goldberger (Respondents) violated Rule 105 of Regulation M of the Exchange Act with respect to two secondary offerings. In April 2007, Goldberger and AGB Partners sold securities short within five business days before the pricing of an offering in one account, and then covered a portion of the short position with shares Bied and AGB Partners purchased in the secondary offering through a different account. Effective October 2007, the Commission amended Rule 105 to eliminate the covering requirement and to prohibit, with certain exceptions, the purchase of offering shares by any person who sold short the same securities during the five day restricted period. In June 2008, Goldberger and AGB Partners sold securities short in one account within five business days before the pricing of the issuer's secondary offering. Bied and AGB Partners then purchased offering shares in a different account. Respondents failed to manage the accounts to meet an exception for trading in separate accounts. Based on the above, the Order censures Respondents and orders them to cease-and-desist from violations of Rule 105 of Regulation M of the Exchange Act, and to pay disgorgement of $38,444, a civil penalty of $20,000 and prejudgment interest of $2,921. Respondents consented to the issuance of the Order without admitting or denying any of the findings in the proceedings. (Rels. 34-61422; IA-2977; File No. 3-13764) Commission Orders Hearing on Registration Revocation or Suspension Against East Delta Resources Corp. for Failure to Make Required Periodic FilingsOn Jan. 26, 2010, the Commission issued an order instituting 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 East Delta Resources Corp. for failure to make required periodic filings with the Commission. In the Order, the Division of Enforcement (Division) alleges that East Delta Resources Corp. is delinquent in its periodic filings with the Commission. In this proceeding, instituted pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Exchange Act), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the Respondent 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 thereunder, are true. The judge in the proceeding will then determine whether the registration pursuant to Exchange Act Section 12 of the securities of the Respondent 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. Separately, on Jan. 13, 2010 the Commission suspended trading in East Delta securities for failure to file periodic reports, and today filed a complaint in United States District Court for the Eastern District of New York against East Delta, Victor Sun, David Amsel and Mayer Amsel for a market manipulation scheme. (Rel. 34-61423; File No. 3-13765) SEC Files Complaint Against East Delta Resources Corp., Victor Sun, David Amsel and Mayer Amsel for Market Manipulation SchemeThe Securities and Exchange Commission today filed a complaint against East Delta Resources Corp. (East Delta), Victor Sun, David Amsel and Mayer Amsel in United States District Court for the Eastern District of New York, alleging that they violated the Federal securities laws in a scheme to manipulate the market for the securities of East Delta. According to the complaint, from 2004 through at least 2006, the Defendants pumped up the volume of market activity of East Delta stock, issued false press releases and illegally sold East Delta shares that they had received from East Delta at little or no cost. The fraudulent proceeds from this scheme totaled more than $1,400,000. The complaint alleges that from 2004 through at least 2006, Mayer Amsel, a consultant to East Delta, engaged in wash sales, matched orders, and other manipulative trading to give the market the false impression that there was real demand for East Delta shares. During this period, East Delta's share price generally moved upward from around $.25 in early 2004 to a high of just above $1 in September 2005 and February 2006. The complaint further alleges that David Amsel, Mayer Amsel's brother and the company's investor relations contact, gave Mayer full authority to trade in his Canadian and U.S. brokerage accounts that Mayer Amsel used to conduct his manipulative trading of East Delta stock. According to the complaint, the purportedly free trading shares Mayer Amsel used to conduct his manipulation came both from East Delta via an improper registration statement on Form S-8, as well as from millions of shares that CEO Victor Sun secretly controlled in the name of others. The complaint also alleges that David Amsel and Victor Sun, as the manipulative trading was ongoing, prepared and caused East Delta to issue and file materially false and misleading and touting press releases and Commission filings about East Delta's mining business. The complaint alleges that David and Mayer Amsel together earned at least $800,000 from the fraudulent scheme, and that Sun earned at least $600,000. In addition, the complaint alleges that East Delta has failed entirely to file its required annual report for 2008 and quarterly reports for the first three quarters in 2009 to the Commission. The Commission's complaint alleges that East Delta, Sun and the Amsels violated or aided and abetted violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 10b-5, 12b-20 and 13a-1. The complaint alleges that East Delta also violated Exchange Act Rule 13a-13, and that Sun violated Exchange Act Section 16(a) and Rules 13a-14 and 16a-3. It seeks a judgment permanently enjoining Defendants from violating these securities laws, requiring an accounting and the payment of disgorgement plus prejudgment interest, requiring the payment of civil monetary penalties, barring Sun and the Amsels from participating in future penny stock offerings, and barring Sun and David Amsel from serving as an officer or director of a registered issuer. Separately, on Jan. 13, 2010 the Commission suspended trading in East Delta securities for failure to file periodic reports, and today ordered that administrative proceedings be instituted to determine whether to revoke or suspend the registration of the securities of East Delta. The SEC acknowledges the assistance of the British Columbia Securities Commission, the Quebec Autorite des Marches Financiers and FINRA in its investigation. [SEC v. East Delta Resources Corp., Victor Sun, David Amsel and Mayer Amsel, Civil No. CV10-0310 (E.D.N.Y.)] (LR-21395) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2010/dig012610.htm
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