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COMMISSION ANNOUNCEMENTSSEC Suspends Trading in Securities of Prospero GroupThe Securities and Exchange Commission announced today the temporary suspension of trading in the securities of Prospero, commencing at 9:30 a.m. EDT on Sept. 3, 2010, and terminating at 11:59 p.m. EDT on Sept. 17, 2010. The Commission temporarily suspended trading in the securities of Prospero due to a lack of current and accurate information about the company because it failed to file certain periodic reports with the Commission and because certain of the reports that it did file did not include all required information, included internally inconsistent information, and contained information that appeared misleading and/or insufficiently detailed. The order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934. The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by this company. Brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to Prospero’s securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action. (Rel. 34-62838) ENFORCEMENT PROCEEDINGSAdministrative and Cease-And-Desist Proceedings Instituted Against Nationally Recognized Statistical Rating Organization Lace Financial Corporation, Its Founder, Barron Putnam, and Its Former President, Damyon MouzonOn September 2, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 15E(d) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and Cease-and-Desist Orders against LACE Financial Corporation, a registered Nationally Recognized Statistical Rating Agency (NRSRO), and Barron Putnam, its founder and majority owner during the relevant time period. The Order finds that LACE made misrepresentations in its application to become registered as an NRSRO and its accompanying request for an exemption from a conflict-of-interest provision. Exchange Act Rule 17g-5(c)(1) (the Ten Percent Rule) prohibits an NRSRO from issuing or maintaining a credit rating solicited by a person that, in the most recently ended fiscal year, provided the NRSRO with net revenue equaling or exceeding ten percent of the NRSRO’s total net revenue for the fiscal year. In its NRSRO application and request for an exemption from the Ten Percent Rule, LACE materially misstated the amount of revenue it received from its largest customer during 2007. LACE also violated certain other provisions governing NRSROs by failing to disclose in its NRSRO application that it performed an extra layer of review when determining credit ratings for certain issuers whose securities made up the pools of asset-backed securities managed by LACE’s largest customer, failing to maintain written policies and procedures governing this extra layer of review, furnishing inaccurate audited financials to the Commission for 2008, failing to maintain all e-mails concerning its credit ratings, and permitting Putnam to participate in determining the credit rating for an entity whose stock he owned. The Order finds that, as a result of the conduct described above, LACE willfully violated Sections 15E(a)(1), 15E(h)(1), 15E(k), and 17(a) of the Exchange Act, and Rules 17g-1(a), 17g-2(a)(6), 17g-2(b)(7), 17g-3(a)(1), and 17g-5(c)(2) thereunder, and that Putnam was a cause of LACE’s violations. Pursuant to the Order, LACE is censured and ordered to pay a $20,000 penalty, and LACE and Putnam are ordered to cease-and-desist from committing or causing any violations and any future violations of these provisions. LACE and Putnam consented to the issuance of the Order without admitting or denying the findings. The Commission also issued an Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 21C of the Securities Exchange Act of 1934 against LACE’s former president, Damyon Mouzon. In the Mouzon Order, the Division of Enforcement alleges that as LACE’s president, Mouzon was responsible for ensuring the accuracy of the information provided to the Commission in connection with LACE’s NRSRO application and its request for an exemption from the Ten Percent Rule, and that he knew or should have known that LACE’s representations regarding the amount of revenue received from its largest client during 2007 were inaccurate. The Division of Enforcement further alleges that Mouzon knew or should have known that LACE was required to disclose the extra layer of review performed for certain issuers in its NRSRO application and maintain written policies and procedures governing this extra layer of review, but failed to ensure that LACE did so. The Division of Enforcement also alleges that, as LACE’s president, Mouzon was responsible for managing the firm’s operations and knew or should have known that, as a registered NRSRO, LACE was required to retain all e-mails relating to its credit ratings, but failed to ensure that LACE did so. The Division of Enforcement alleges that, as a result of this conduct, Mouzon was a cause of LACE’s violations of Sections 15E(a)(1) and 17(a) of the Exchange Act, and Rules 17g-1(a), 17g-2(a)(6), and 17g-2(b)(7) thereunder. A hearing in this matter will be scheduled before an Administrative Law Judge, who will hear evidence from the Division of Enforcement and Mouzon. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision no later than 300 days from the date of service of the Mouzon Order. (In the Matter of Lace Financial Corp. and Barron Putnam, Rel. 34-62834; File No. 3-14028; In the Matter of Damyon Mouzon, Rel. 34-62835, File No. 3-14029) Commission Revokes Registration of Securities of Cityfed Financial Corp. For Failure to Make Required Periodic FilingsOn September 3, the Commission revoked the registration of each class of registered securities of CityFed Financial Corp. (CTYF) 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, CTYF 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 CityFed Financial 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 CTYF’s securities pursuant to Section 12(j) of the Exchange Act. This Order settled the charges brought against CTYF in In the Matter of Atchison Casting Corp. (n/k/a Bradken-Atchison/St. Joseph, Inc.), et al., Administrative Proceeding File No. 3-14005. 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 contact:
Additional Materials Available at www.sec.gov Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 as to CityFed Financial Corp., In the Matter of Atchison Casting Corp. (n/k/a Bradken-Atchison/St. Joseph, Inc.), et al., Administrative Proceeding File No. 3-14005, Exchange Act Release No. 34-62839 (Sept. 3, 2010). Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Atchison Casting Corp. (n/k/a Bradken-Atchison/St. Joseph, Inc.), et al., Administrative Proceeding File No. 3-14005, Exchange Act Release No. 62698 (Aug. 12, 2010). (Rel. 34-62839; File No. 3-14005) In the Matter of Craig KellermanOn September 3, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions against Craig Kellerman, a former registered representative Sterling Foster & Company, Inc. The Order finds that the United States District Court for the Southern District of New York entered a final judgment by consent against Kellerman on May 3, 2010, in the civil action entitled Securities and Exchange Commission v. Sterling Foster, et al., 97-CV-1077. The final judgment enjoined Kellerman from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and Regulation M of the Exchange Act and Rules 101 and 102 thereunder. The Order further finds that that the Commission's complaint in the civil action alleged that Kellerman and others defrauded investors of at least $75 million between June 1994 and February 1997 by manipulating the prices of six companies’ securities sold through boiler-room sales practices by Sterling Foster brokers at artificially inflated prices. Based on the above, the Order bars Kellerman from association with any broker or dealer. Kellerman consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. 34-62840; File No. 3-14030) In the Matter of Edward M. DenigrisOn September 3, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions against Edward M. Denigris. The Order finds that an order of permanent injunction was entered against Denigris in the civil action entitled Securities and Exchange Commission v. Amante Corporation, et al., Civil Action Number 09-CV-61716-JIC, in the United States District Court for the Southern District of Florida. The Order also finds that from May 2008 through October 2009, Denigris, the president and sole director of Amante Corporation, solicited investors to purchase Amante Corporation’s securities. Denigris received transaction-based compensation in connection with sales of Amante Corporation’s securities. Further, the Order finds that when Denigris solicited investors to purchase Amante Corporation’s securities, Denigris was neither registered as a broker or dealer nor associated with a registered broker or dealer. Based on the above, the Order bars Denigris from association with any broker or dealer. Denigris consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the injunction. (Rel. 34-62844; File No. 3-14031) District Court Enters Final Judgments Against Defendants Jason T. Rose, David G. Rose, and Mark Long, and Relief Defendants Brian C. Rose and Joyce A. RoseOn September 2, the United States District Court for the Southern District of Indiana entered separate Final Judgments of against defendants David G. Rose, Jason T. Rose, and Mark Long, and relief defendants Brian C. Rose and Joyce A. Rose. The final judgments against David Rose and Jason Rose enjoin each 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 and Exchange Rule 10b-5 and require David Rose to pay full disgorgement of $15,400,000.00, prejudgment interest of $205,846.67, and a civil penalty of $130,000.00, and Jason Rose to pay full disgorgement of $182,896.42, prejudgment interest of $4,298.12, and a civil penalty of $130,000.00. The final judgment against Long enjoins him from violating Sections 5(a) and 5(c) of the Securities Act, and Section 15(a) of the Exchange Act, and orders him to pay full disgorgement of $446.775.00, prejudgment interest of $13,537.73, and a civil penalty of $130,000.00. Relief defendant Brian Rose was ordered to pay full disgorgement of $431,517.32, plus prejudgment interest of $10,140.79. Relief defendant Joyce Rose was ordered to pay full disgorgement of $192,000.00 plus prejudgment interest of $4,512.06. Separately, David Rose, Jason Rose, and Mark Long have agreed to be barred from future association with any broker or dealer. The Commission’s June 8, 2009, complaint alleged that, among other things, from at least April 2006 through December 2007, the Roses used Berkshire to carry out an offering fraud and sell unregistered securities. Although Jason Rose was put forward as the public face of the company, his father, David Rose, who had an extensive disciplinary history, ran the company behind the scenes. The complaint further alleged that Berkshire raised approximately $15.5 million from approximately 265 investors in the US and Canada. The complaint also alleged that Berkshire misled defendants, among other things, about the use of investor proceeds, the experience of Jason Rose, David Rose’s role at the company, and the expected rate of return. Additionally, the complaint alleged that Long, the head of sales at Berkshire, ran one of two "boiler room" operations that used teams of sales agents to sell units of participation to the public. [SEC v. Berkshire Resources, L.L.C., et al., Civil Action No. 09-0704-SEB-JMS, S.D. Ind.] (LR-21642) SELF-REGULATORY ORGANIZATIONSImmediate Effectiveness of Proposed Rule ChangesA proposed rule change filed by the International Securities Exchange, LLC amending Rules 413 and 2006 (SR-ISE-2010-86) 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 September 6. (Rel. 34-62815) A proposed rule change filed by New York Stock Exchange LLC (SR-NYSE-2010-61) extending the operation of its New Market Model Pilot until the earlier of Securities and Exchange Commission approval to make such pilot permanent or January 31, 2011 has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the proposal is expected in the Federal Register during the week of September 6. (Rel. 34-62819) A proposed rule change filed by NYSE Amex LLC (SR-NYSEAmex-2010-86) extending the operation of its New Market Model Pilot until the earlier of Securities and Exchange Commission approval to make such pilot permanent or January 31, 2011 has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the proposal is expected in the Federal Register during the week of September 6. (Rel. 34-62820) A proposed rule change filed by NYSE Amex LLC to amend the Exchange price list (SR-NYSEAmex-2010-90) 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 September 6. (Rel. 34-62825) A proposed rule change filed by the New York Stock Exchange LLC to amend the Exchange price list (SR-NYSE-2010-63) 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 September 6. (Rel. 34-62826) A proposed rule change filed by NASDAQ OMX BX, Inc. (SR-BX-2010-061) to permit concurrent listing of $2.50 and $1 strikes on MNX Options 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 September 6. (Rel. 34-62829) Proposed Rule ChangesThe Municipal Securities Rulemaking Board filed a proposed rule change (SR-MSRB-2010-08) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend Rule A-3, on membership on the board to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act. Publication is expected in the Federal Register during the week of September 6. (Rel. 34-62827) The Commission has approved a proposed rule change (SR-FICC-2010-02) filed by Fixed Income Clearing Corporation (FICC) under Section 19(b)(1) of the Exchange Act to amend the Rules of the Government Securities Division and the Mortgage-Backed Securities Division to change the classification of U.S. branches or agencies of non-U.S. banks from foreign members to U.S. members. Publication of the proposal is expected in the Federal Register during the week of September 6. (Rel. 34-62828) The Commission issued a notice of filing of a proposed rule change by the Municipal Securities Rulemaking Board (MSRB) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, relating to Rule G-37, on Political Contributions and Prohibitions on Municipal Securities Business (SR-MSRB-2010-07). Publication is expected in the Federal Register during the week of September 6. (Rel. 34-62830) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2010/dig090310.htm
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