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COMMISSION ANNOUNCEMENTSJoint CFTC-SEC Advisory Committee on Emerging Regulatory Issues Announces Agenda/Participants for August 11 MeetingThe Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) today announced the agenda and participant list for the third meeting of the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues on August 11. The Joint Committee will continue its examination of the unusual market events of May 6, focusing on investor perspectives. The meeting at the CFTC headquarters building (1155 21st Street NW, Washington D.C.) will be open to the public with seating on a first-come, first-served basis. The meeting also will be webcast on the CFTC's website. Joint CFTC-SEC Advisory Committee Meeting Agenda and Panelists9 a.m. Introduction and Opening Statements from CFTC Chairman Gary Gensler and SEC Chairman Mary L. Schapiro 9:15 Panel Discussion: Investor Perspectives on May 6 Panelists:
11:15 Break 11:30 Subcommittee Reports and Next Steps 12:30 Commissioner Comments and Conclusion (Press Rel. 2010-145) ENFORCEMENT PROCEEDINGSIn the Matter of Steven W. SalutricOn Aug. 5, 2010, the Commission issued an Order Instituting Administrative Proceedings pursuant to Section 203(f) of the Investment Advisers Act of 1940 (Advisers Act) and Notice of Hearing (Order) against Steven W. Salutric (Salutric) based upon the entry of a Permanent Injunction against him in the United States District Court for the Northern District of Illinois (SEC v. Steven W. Salutric, Civil Case No. 10-0115). In the Order the Division of Enforcement (Division) alleges that on Jan. 8, 2010, the Commission filed a Complaint against Respondent Salutric in the above captioned litigation, alleging that Salutric, from at least 2007 through the present, acting as an investment adviser, misappropriated at least $1.8 million from at least 17 of his clients to support businesses and entities linked to him and, as part of a Ponzi scheme, to make payments to other clients. The Complaint also alleged that in a particularly egregious example of Salutric's fraudulent conduct, Salutric misappropriated over $400,000 from a 96-year-old client who resides in a nursing home and suffers from dementia. The Complaint also alleged that Salutric misappropriated client funds by making unauthorized withdrawals from his clients' accounts at Charles Schwab & Co., Inc. (Schwab), which serves as the custodian of client assets for Results One Financial, LLC through the use of forged client signatures on written withdrawal request forms transmitted to Schwab. Finally, the Complaint alleged that Respondent Salutric's conduct violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), Rule 10b-5 promulgated under the Exchange Act, Sections 206(1)-(2) of the Advisers Act, and Rules 204-2(a)(2) and (6) of the Advisers Act. The Division also alleges that on July 19, 2010, an agreed partial final judgment was entered against Respondent Salutric permanently enjoining him from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 204, 206(1) and 206(2) of the Advisers Act and Rule 204-2 thereunder. A hearing will be scheduled before an Administrative Law Judge to determine whether the allegations contained in the Order are true, and to provide the Respondent an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest. The Order requires the Administrative Law Judge to issue an initial decision no later than 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rel. IA-3066; File No. 3-13996) Initial Decision Barring Edward J. Driving Hawk, Sr., Declared FinalThe Commission has declared final the initial decision of an administrative law judge barring Edward J. Driving Hawk, Sr., (Driving Hawk) from association with any broker or dealer. The initial decision found that on Sept. 25, 2006, the United States District Court for the District of Arizona, entered a judgment 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 thereunder. SEC v. U.S. Reservation Bank & Trust, No. 2:02 cv 00581 EHC. Driving Hawk also entered into a Plea Agreement in which he pled guilty to one count of conspiracy to commit mail and wire fraud in U.S. v. Driving Hawk, No. 2:06 cr 00181 ROS in the District of Arizona. Driving Hawk was sentenced to a term of imprisonment of twelve months and one day and ordered to pay criminal monetary penalties of over $3.2 million. Driving Hawk has served the prison sentence and is required to pay monetary penalties in equal monthly installments of $500 for a period of thirty four months, with the balance to be paid within 90 days prior to the expiration of supervision. The initial decision found that Driving Hawk instituted a scheme to intentionally defraud at least 20 individual investors and investor groups of over $78 million dollars for more than two years. (Rel. 34-62659; File No. 3 13745) Initial Decision Barring Michael P. Ryan and Rose M. Rudden Declared FinalThe Commission has declared final the initial decision of an administrative law judge barring Michael P. Ryan (Ryan) and Rose M. Rudden (Rudden) from association in a supervisory capacity with any broker, dealer, or investment adviser with the right to reapply after one year and ordered each to pay a civil money penalty of $65,000. The initial decision found that between November 1999 and February 2007, four registered representatives under the supervision of Ryan and Rudden sold variable annuities to elderly customers in south Florida. The representatives made material misrepresentations and omissions and/or that the variable annuities that they sold were unsuitable investments for the customers. Additionally, the initial decision found that Ryan, from 2000 through 2006, failed reasonably to respond to red flags of wrongdoing in the variable annuity sales practices of two registered representatives, and from 2004 through 2007, so failed as to four registered representatives. The initial decision also found that Rudden inadequately investigated customer complaints. (Rels. 34-62660; IA-3067; File No. 3 13532) SEC Charges Former Employee of Pride International with Violating the Foreign Corrupt Practices ActOn Aug. 5, 2010, the Securities and Exchange Commission charged a former employee of Pride International, Inc. (Pride) with violations relating to bribes paid to foreign officials in Venezuela. The Commission's complaint names Joe Summers of John Day, Oregon, Pride's former Venezuela Country Manager. The complaint alleges that from approximately 2003 to 2005, Summers authorized or allowed payments totaling approximately $384,000 to third-party companies believing that all or a portion of the funds would be given to an official of Venezuela's state-owned oil company in order to secure extensions of three drilling contracts. The complaint further alleges that Summers authorized the payment of approximately $30,000 to a third party believing that all or a portion of the funds would be given to an employee of Venezuela's state-owned oil company in order to obtain the payment of receivables. The SEC's complaint charges Summers with violating Sections 13(b)(5) and 30A of the Securities Exchange Act of 1934 and Rule 13b2-1 thereunder, and aiding and abetting violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 30A of the Securities Exchange Act of 1934. Without admitting or denying the SEC's allegations in the complaint, Summers consented to the entry of a permanent injunction and a civil penalty of $25,000. [SEC v. Joe Summers, Civil Action No. 4:10-cv-02786, USDC, SDTX] (LR-21617) SEC Files Anti-Bribery Charges Against Two Global Tobacco CompaniesThe SEC today charged two major tobacco companies, Universal Corporation, Inc. and Alliance One International, Inc., with violating, among other things, the anti-bribery provisions of the Foreign Corrupt Practices Act of 1977 (FCPA) for their involvement in a multi-million dollar bribery scheme with government officials in Thailand to obtain nearly $30 million in sales contracts to supply tobacco. The SEC also charged Alliance One with paying bribes in Kyrgyzstan and making improper payments in China, Greece, and Indonesia and Universal with making improper payments in Malawi and Mozambique. Moreover, the SEC's complaints alleged Universal and Alliance One also engaged in books and records and internal control violations. Without admitting or denying the SEC's allegations, defendants Universal and Alliance One consented to the entry of final judgments permanently enjoining each of them from violating the anti-bribery, books and records, and internal control provisions of the FCPA, codified as Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934. Universal and Alliance One are ordered to pay disgorgement of $4,581,276.51 and $10,000,000, respectively, and each is ordered to retain an independent monitor for three years. In related criminal proceedings announced today, the U.S. Department of Justice filed criminal actions against a Universal subsidiary and two Alliance One subsidiaries charging each of them with one count of conspiring to violate the FCPA and one count of violating the anti-bribery provisions of the FCPA. Universal and Alliance One have entered into non-prosecution agreements with the DOJ and agreed to pay criminal penalties of $4,400,000 and $9,450,000, respectively, and retain independent monitors for a period of three years. The SEC acknowledges and appreciates the assistance provided by the Department of Justice, Fraud Section, and the Federal Bureau of Investigation. [SEC v. Universal Corporation, Inc., Civil Action No. 01:10-cv-01318 (RWR) (D.D.C.); SEC v. Alliance One International, Inc., Civil Action No. 01:10-cv-01319 (RMU) (D.D.C.)] (LR-21618; AAE Rel. 3170) SEC v. CJ's Financial and Candice D. CampbellThe Securities and Exchange Commission today announced fraud charges and an asset freeze against CJ's Financial (CJF) and Candice Campbell (Campbell), a resident of Canton, Michigan. At the SEC's request for emergency relief, the Hon. Stephen J. Murphy, III, United States District Court, Eastern District of Michigan, issued a temporary restraining order against Campbell and CJF and an order freezing all assets under the control of Campbell and CJF, in addition to granting other emergency relief. The SEC's complaint, filed in the United States District Court for the Eastern District of Michigan, alleges that from approximately May 2009 through June 2010, Campbell and CJF obtained approximately $1,057,400 from more than 60 investors, for a supposedly guaranteed trading program, but invested less than 10% of the proceeds. Campbell solicited funds in person and through a website, cjsfinancial.com. As recently as of July 9, 2010, CJF portrayed itself on its website as an "independent investment firm dedicated to putting your money to work for you!" The complaint alleges that Campbell told investors that she was a day trader who would invest their funds in the stock market. The complaint further alleges that CJF and Campbell specifically informed potential investors, among other things, that their "initial investment will NEVER go down in value;" that CJF guaranteed "[a]t least a 10% return monthly on your investment;" and that there will be "NO PENALTIES OR TAXES to pay when you withdraw your money, because CJ's Financial pays your Capital Gains taxes!" According to the complaint, Campbell's representations to investors regarding her use of investor funds and trading profits were all false. Specifically, the complaint alleges that Campbell invested only a small portion of the investor funds that she raised. Instead, Campbell used at least $540,000 of investor funds to pay personal expenses, including approximately $127,000 for travel expenses, more than $100,000 to car dealerships, approximately $33,046 at several jewelry retailers, approximately $28,350 at sporting goods retailers, and approximately $29,124 at furniture stores. Campbell used approximately $376,640 to pay other investors in Ponzi scheme fashion. Out of approximately $1,057,400 raised by Campbell, only $58,000 was transferred into a trading account. The complaint further alleges that when some investors requested the return of their investments, Campbell, through an assistant, tried to conceal the scheme by claiming the SEC was investigating her and CJF and had frozen its assets and bank accounts. As alleged in the SEC's complaint, this was simply false, as the Commission had not frozen CJF's or Campbell's bank accounts, trading accounts, or other assets. Instead, the complaint alleges this was a lie meant to conceal the fact that the defendants could not return investors' funds. According to the SEC complaint, Campbell and CJF violated Section 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC's investigation of this matter is continuing. [SEC v. CJ's Financial and Candice D. Campbell, Case No. 2:10-cv-13083 (E.D. Michigan)] (LR-21619) Court Enters Final Judgment Against San Marcos, Texas Resident Richard E. Riner and His Company Southwest Income Marketing, Inc.The Securities and Exchange Commission announced today that on Aug. 5, 2010, Judge Elaine Bucklo of the United States District Court for the Northern District of Illinois entered a final judgment against Richard E. Riner, of San Marcos, Texas, and Southwest Income Marketing, Inc. (SIMI), Riner's business. The final judgment: (1) enjoined Riner and SIMI from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, Rules 10b-5 and 10b-10 promulgated thereunder, and enjoined Riner from aiding and abetting violations of Rule 10b-10 of the Exchange Act; (2) ordered Riner and SIMI to pay disgorgement in the amount of 2,784,293.38, plus prejudgment interest of $1,155,871.72, for a total of $3,940,165.10; and (3) ordered Riner to pay a civil penalty in the amount of $120,000. The SEC's complaint in this matter charges that Michael E. Kelly and 25 other defendants, including Riner and SIMI, participated in a massive fraud on U.S. investors that involved the offer and sale of securities in the form of Universal Leases. Universal Lease investments were structured as timeshares in several hotels in Cancun, Mexico, coupled with a pre-arranged rental agreement that promised investors a high, fixed rate of return. The SEC's complaint alleges that from 1999 until 2005, Kelly and others, including Riner and SIMI, raised at least $428 million through the Universal Lease scheme from investors throughout the United States, with more than $136 million of the funds invested coming from IRA accounts. The SEC further alleges that a nationwide network of unregistered salespeople who sold the Universal Leases, including Riner and SIMI, collected undisclosed commissions totaling more than $72 million. The SEC also alleges that Kelly and others ran the scheme from Cancun, Mexico, through a number of foreign entities in Mexico and Panama. According to the SEC's complaint, Kelly and others told investors that Universal Leases would generate guaranteed income through the leasing of investor timeshares by a large, independent leasing agent. In fact, the complaint alleges, the leasing agent was a small Panamanian travel agency controlled by Kelly, and for most of the scheme its payments to investors came from accounts funded by money raised from new investors. Further, the complaint alleges that Kelly and the other defendants, including Riner and SIMI, failed to disclose key facts about the Universal Lease investment, including the risks of the investment and that Kelly was paying commissions as high as 27% to the selling brokers. The SEC's action against the remaining defendants is pending. For further information, see Litigation Release Nos. 20267 (Sept. 5, 2007), 20573 (May 14, 2008) , 20578 (May 15, 2008), 20579 (May 15, 2008), 20664 (July 31, 2008), 20679 (Aug. 12, 2008), 20708 (Sept. 9, 2008); 20709 (Sept. 9, 2008), 20799 (Nov. 6, 2008), 21003 (April 15, 2009), 21481 (April 8, 2010) and 21583 (June 29, 2010); [SEC v. Michael E. Kelly, et al., Case No. 1:07-CV-4979 in the United States District Court for the Northern District of Illinois] (LR-21620) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change (SR-NYSEArca-2010-70) filed by NYSE Arca adding 75 options classes to the penny pilot program 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 August 9. (Rel. 34-62625) A proposed rule change filed by NYSE Amex adding 75 options classes to the Penny Pilot Program (SR-NYSEAmex-2010-73) 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 August 9. (Rel. 34-62626) A proposed rule change (SR-Phlx-2010-107) filed by NASDAQ OMX PHLX to make its sponsored access pilot program permanent 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 August 9. (Rel. 34-62628) A proposed rule change (SR-Phlx-2010-102) filed by NASDAQ OMX PHLX relating to routing 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 August 9. (Rel. 34-62631) A proposed rule change (SR-BX-2010-049) filed with the Commission by NASDAQ OMX BX proposing to amend the fee schedule of the Boston Options Exchange Facility 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 August 9. (Rel. 34-62632) A proposed rule change (SR-CBOE-2010-072) filed by the Chicago Board Options Exchange relating to PULSe fees 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 August 9. (Rel. 34-62637) A proposed rule change filed by the EDGX Exchange (SR-EDGX-2010-10) relating to amendments to the EDGX Exchange, Inc. Fee Schedule 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 August 9. (Rel. 34-62640) A proposed rule change filed by the EDGA Exchange (SR-EDGA-2010-10) relating to amendments to the EDGA Exchange, Inc. Fee Schedule 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 August 9. (Rel. 34-62641) A proposed rule change filed by The Chicago Stock Exchange (SR-CHX-2010-19) to amend its Order Cancellation 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 August 9. (Rel. 34-62642) A proposed rule change filed by the National Stock Exchange (SR-NSX-2010-10) to extend post regular trading hours trading session 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 August 9. (Rel. 34-62643) A proposed rule change filed by the International Securities Exchange related to crossing mechanisms (SR-ISE-2010-61) 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 August 9. (Rel. 34-62644) A proposed rule change (SR-BX-2010-053) filed by NASDAQ OMX BX to amend the rules of the Boston Options Exchange Group, LLC to enable the listing and trading of options on the Sprott Physical Gold Trust 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 August 9. (Rel. 34-62647) A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2010-071) to amend fees schedule 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 August 9. (Rel. 34-62648) A proposed rule change filed by The Chicago Stock Exchange (SR-CHX-2010-18) to alter its tiered schedule of fees and rebates for participants for trade executions of single-sided orders in securities priced over one dollar 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 August 9. (Rel. 34-62650) A proposed rule change (SR-NFA-2010-03) filed by the National Futures Association relating to amendments to Compliance Rule 2-30 and the related interpretive notice regarding customer information and risk disclosure has become effective. Publication is expected in the Federal Register during the week of August 9. (Rel. 34-62651) Proposed Rule ChangesThe NASDAQ Stock Market filed a proposed rule change under Rule 19b-4 (SR-NASDAQ-2010-096) relating to the National Quotation Dissemination Service. Publication is expected in the Federal Register during the week of August 9. (Rel. 34-62629) The Financial Industry Regulatory Authority filed a proposed rule change (SR-FINRA-2010-042) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to adopt FINRA Rule 4160 (Verification of Assets). The proposed rule provides that a member, when notified by FINRA, may not continue to custody or retain record ownership of assets, at a non-member financial institution, which, upon FINRA staff's request, fails promptly to provide FINRA with written verification of assets maintained by the member at such financial institution. Publication is expected in the Federal Register during the week of August 9. (Rel. 34-62655) Approval of Proposed Rule ChangesThe Commission granted approval to a proposed rule change submitted by NASDAQ OMX BX (SR-BX-2010-043) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to pricing for direct circuit connections. Publication is expected in the Federal Register during the week of August 9. (Rel. 34-62638) The Commission granted approval to a proposed rule change submitted by NASDAQ OMX PHLX (SR-Phlx-2010-89) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to pricing for direct circuit connections. Publication is expected in the Federal Register during the week of August 9. (Rel. 34-62639) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2010/dig080610.htm
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