SEC News Digest

COMMISSION ANNOUNCEMENTS

SEC Staff to Hold Seminar to Help Mutual Funds Comply With XBRL Reporting Rules

Securities and Exchange Commission staff will conduct a public seminar next month to help mutual funds comply with new rules that require them to file data in the risk/return summary section of the prospectus using eXtensible Business Reporting Language (XBRL), which can provide investors with quicker access to the data they want in a format that is easily used, searched, and analyzed.

At the seminar on June 4 beginning at 10 a.m., SEC staff will discuss both the rule requirements and the XBRL taxonomy, which is the list of tags associated with the risk/return summary. The compliance date for open-end funds is Jan. 1, 2011.

To ensure that the seminar is responsive to the needs of mutual funds, the SEC staff is seeking suggested questions and topics to be discussed. Interested parties should e-mail their questions to Ask-OID@sec.gov and include "Mutual Fund Education Seminar" in the subject line.

The seminar will be held in the auditorium at the SEC's headquarters (100 F Street N.E. in Washington D.C.) and is scheduled to end at 12:30 p.m. ET. The event will be webcast live on the SEC website and also will be archived for later viewing.

Seating for the seminar will be on a first-come, first-served basis. Reasonable accommodations for persons with disabilities attending this event in person can be arranged by submitting a request to DisabilityProgramOfficer@SEC.gov three business days prior to the event. Captioning will be provided on the SEC webcast.

For additional information about the seminar, contact Ask-OID@sec.gov or (202) 551-4144. (Press Rel. 2010-71)

ENFORCEMENT PROCEEDINGS

Commission Revokes Registration of Securities of Vertigo Theme Parks, Inc. (F/N/A Snap2 Corp.) for Failure to Make Required Periodic Filings

On May 5, 2010, the Commission revoked the registration of each class of registered securities of Vertigo Theme Parks, Inc. (f/k/a Snap2 Corp.) (Vertigo Theme Parks) 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, Vertigo Theme Parks 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 Vertigo Theme Parks, Inc. (f/k/a Snap2 Corp.) 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 Vertigo Theme Parks' securities pursuant to Section 12(j) of the Exchange Act. This order settled the proceedings brought against Vertigo Theme Parks in In the Matter of V-GPO, Inc., et al., Administrative Proceeding File No. 3-13864.

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 V-GPO, Inc., et al., Administrative Proceeding File No. 3-13864, Exchange Act Release No. 61940, April 20, 2010. (Rel. 34-62035; File No. 3-13864)

In the Matter of Neil V. Moody

On May 5, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Neil V. Moody. The Order finds that from at least 2003 through January 2009, Moody was associated with the unregistered investment advisers Valhalla Management, Inc. and Viking Management, LLC, as president and co-managing member, respectively. The Order also finds that on April 7, 2010, the United States District Court for the Middle District of Florida entered a judgment by consent enjoining Moody from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8, in the civil injunctive action entitled SEC v. Neil V. Moody and Christopher D. Moody, et al., Civil Action No. 8:10-cv-00053-RAL-TBM. The Order finds that the Commission's complaint alleged that, from at least 2003 through December 2008, Moody misled investors in three hedge funds he operated by distributing offering materials, account statements, and newsletters that misrepresented the funds' investment returns and performance, overstating the value of the funds' assets, and by claiming he controlled all of the investment and trading decisions.

Based on the above, the Order bars Moody from association with any investment adviser, with the right to reapply for association after five years. Moody consented to the issuance of the Order without admitting or denying the findings in the Order, except he admitted to the entry of the injunction. (Rel. IA-3020; File No. 3-13879)

In the Matter of Christopher D. Moody

On May 5, 2010, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Christopher D. Moody. The Order finds that from at least 2003 through January 2009, Moody was associated with the unregistered investment advisers Valhalla Management, Inc. and Viking Management, LLC, as vice-president and treasurer, and as a co-managing member, respectively. The Order also finds that on April 7, 2010, the United States District Court for the Middle District of Florida entered a judgment by consent enjoining Moody from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8, in the civil injunctive action entitled SEC v. Neil V. Moody and Christopher D. Moody, et al., Civil Action No. 8:10-cv-00053-RAL-TBM. The Order finds that the Commission's complaint alleged that, from at least 2003 through December 2008, Moody misled investors in three hedge funds he operated by distributing offering materials, account statements, and newsletters that misrepresented the funds' investment returns and performance, overstating the value of the funds' assets, and by claiming he controlled all of the investment and trading decisions.

Based on the above, the Order bars Moody from association with any investment adviser, with the right to reapply for association after five years. Moody consented to the issuance of the Order without admitting or denying the findings in the Order, except he admitted to the entry of the injunction. (Rel. IA-3021; File No. 3-13880)

SEC Charges Spongetech Delivery Systems, Inc., Its Senior Officers, and Others for a "Pump and Dump" Scheme Involving Ficticious Customers and Sales

Today, the SEC filed a civil injunctive action in the District Court for the Eastern District of New York charging Spongetech Delivery Systems, Inc., affiliated company RM Enterprises International, Inc., Chief Executive Officer Michael Metter, Chief Financial Officer Steven Moskowitz, former Spongetech attorneys Jack Halperin and Joel Pensley, and stock promoter George Speranza with violating, among other things, the antifraud and registration provisions of the federal securities laws for their roles in a massive pump and dump scheme.

The SEC's alleges that beginning as early as April 2007, and continuing to the present, Metter, Moskowitz, and Spongetech engaged in a scheme to increase demand illegally for, and profit from, the unregistered sale of Spongetech stock. According to the complaint, Metter, Moskowitz, and Spongetech accomplished this by, among other things, "pumping" up demand for Spongetech stock through false public statements about non-existent Spongetech customers, bogus sales orders, and phony revenue. The purpose of flooding the market with false public information was to fraudulently inflate the price for Spongetech shares so Metter, Moskowitz, and Spongetech could then "dump" the shares by illegally selling them to the public through affiliated entities in unregistered transactions.

The SEC further alleges that Metter, Moskowitz, and Spongetech illegally distributed approximately 2.5 billion Spongetech shares in unregistered transactions through RM Enterprises and other affiliates. Metter, Moskowitz, Spongetech, and RM Enterprises allegedly used false and baseless attorney opinion letters, rendered by Pensley and Halperin and forged opinion letters in Pensley's name and in the name of a fictitious lawyer, David Bomart, to distribute shares of Spongetech to the public.

The SEC also alleges that Speranza participated in the fraud by creating internet websites and virtual office space for the fictitious customers with which Spongetech claimed to be doing millions of dollars of business.

Today, the United States Attorney's Office for the Eastern District of New York announced that it had arrested Metter and Moskowitz for conspiracy to commit securities fraud and obstruction of justice.

The SEC acknowledges the assistance and cooperation in this investigation of the U.S. Attorney's Office for the Eastern District of New York, the Federal Bureau of Investigation, the Internal Revenue Service, and the Financial Industry Regulatory Authority.

The SEC's investigation is continuing. [SEC v. Spongetech Delivery Systems, Inc., RM Enterprises International, Inc., Steven Y. Moskowitz, Michael E. Metter, George Speranza, Joel Pensley and Jack Halperin, Civil Action No. 10-CV-2031(DLI) (E.D.N.Y.)] (LR-21515; AAE Rel. 3131)

SEC Obtains Permanent Injunctions and Orders to Pay Disgorgement, Prejudgment Interest, and Civil Penalties Against Defendants in Prime Bank Fraud Scheme

The Commission announced that the United States District Court for the District of Colorado entered orders of injunction by consent against defendants Stanley W. Anderson, Edwin A. Smith, Charles L. Kennedy, Michael D. Norton, and Nicholas R. Fair on May 4, 2010. The orders permanently enjoin the defendants from violating Sections 5 and 17 of the Securities Act of 1933 and Sections 10(b) and 15(a) and Rule 10b-5 of the Securities Exchange Act of 1934. The orders against Anderson and Smith hold them jointly and severally liable for payment of $3,197,222, which represents disgorgement of profits from the conduct alleged in the complaint and prejudgment interest. Anderson and Kennedy are also ordered to pay $130,000 civil penalties. The order against Kennedy holds him liable for a total of $434,704.93, which includes disgorgement of profits, prejudgment interest, and a $130,000 civil penalty.

The Court also entered default judgments against CFO-5, LLC and Trinity International Enterprises, Inc. The judgments enjoin the companies from violating federal securities law and hold them jointly and severally liable with Anderson and Smith for payment of $3,197,222.

The Commission began this action by filing a complaint on July 28, 2008, alleging that the defendants sold unregistered securities in a prime bank fraud scheme. The complaint alleged that the securities, which the defendants described as European medium term notes that paid nearly immediate returns ranging from 200 to 1000 percent, did not exist. The complaint further alleged that the defendants raised over $5.1 million from at least 100 investors nationwide and that investors' funds were misappropriated or used for unauthorized purposes. Anderson, Smith, Kennedy, Norton, and Fair settled the Commission's charges without admitting or denying the allegations in the complaint. [SEC v. CFO-5, LLC, Trinity International Enterprises, Inc., Stanley W. Anderson, Edwin A. Smith, Charles L. Kennedy, Michael D. Norton, individually and d/b/a Global Asset Services, and Nicholas R. Fair (U.S. District Court for the District of Colorado, Civil Action No. 08-cv-1594-PAB-MEH)] (LR-21516)

INVESTMENT COMPANY ACT RELEASES

Jackson National Life Insurance Company, et al.

An order has been issued pursuant to Section 6(c) of the Investment Company Act to Jackson National Life Insurance Company (Jackson National), Jackson National Separate Account - I, Jackson National Life Insurance Company of New York (JNL New York), JNLNY Separate Account I, and Jackson National Life Distributors LLC (collectively, Applicants), granting exemptions from the provisions of Sections 2(a)(32), 22(c), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder, to the extent necessary to permit recapture, under specified circumstances, of certain contract enhancements applied to purchase payments made under deferred variable annuity contracts issued and to be issued by Jackson National and JNL New York. (Rel. IC-29262 - April 30)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by NASDAQ OMX PHLX relating to rebates for adding and fees for removing liquidity (SR-Phlx-2010-64) 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 May 10. (Rel. 34-62009)

A proposed rule change (SR-ISE-2010-36) filed by International Securities Exchange relating to the options regulatory fee 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 May 10. (Rel. 34-62012)

A proposed rule change filed by NYSE Arca amending market maker requirements for certain covered products (SR-NYSEArca-2010-35) 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 May 10. (Rel. 34-62013)

A proposed rule change filed by the Chicago Board Options Exchange to trade options on S&P 500 Annual Dividend Index with an applied scaling factor of 1 (SR-CBOE-2010-039) 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 May 10. (Rel. 34-62023)

A proposed rule change filed by the NYSE Arca (SR-NYSEArca-2010-33), as modified by Amendment No. 1 thereto, to amend its Rule 4, Capital Requirements, Financial Reports, Margins, 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 May 10. (Rel. 34-62026)

A proposed rule change filed by the International Securities Exchange related to stopped orders (SR-ISE-2010-28) 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 May 10. (Rel. 34-62027)

A proposed rule change (SR-Phlx-2010-65) filed by NASDAQ OMX PHLX to add seventy-five options classes to the 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 May 10. (Rel. 34-62028)

A proposed rule change (SR-NASDAQ-2010-053) filed by The NASDAQ Stock Market to add seventy-five options classes to the 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 May 10. (Rel. 34-62029)

Approval of Proposed Rule Changes

The Commission granted approval to a proposed rule change filed by NYSE Amex (SR-NYSEAMEX-2010-26) under Section 19(b)(2) of the Securities Exchange Act of 1934 deleting Rule 446 - NYSE Amex Equities and adopting new Rule 4370 - NYSE Amex Equities to correspond with rule changes filed by the Financial Industry Regulatory Authority, Inc. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62014)

The Commission granted approval to a proposed rule change filed by the New York Stock Exchange (SR-NYSE-2010-23) under Section 19(b)(2) of the Securities Exchange Act of 1934 deleting NYSE Rule 446 and adopting new Rule 4370 to correspond with rule changes filed by the Financial Industry Regulatory Authority, Inc. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62015)

The Commission granted approval to a proposed rule change (SR-NYSEArca-2010-16) submitted by NYSE Arca pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 amending Rule 6.37A and Rule 6.64. Publication is expected in the Federal Register during the week of May 10. (Rel. 34-62019)

SECURITIES ACT REGISTRATIONS

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