SEC News Digest

COMMISSION ANNOUNCEMENTS

Commission Meetings

Closed Meeting - Thursday, September 23, 2010 - 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Thursday, September 23, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; and other matters relating to enforcement proceedings.

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.

RULES AND RELATED MATTERS

SEC Adopts Amendments to Conform its Rules and Forms to Section 404(c) of the Sarbanes-Oxley Act of 2002, as added by Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act

The Securities and Exchange Commission has adopted amendments to its rules and regulations, including those under the Securities Exchange Act of 1934 (Exchange Act), in a release entitled "Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers," in order to conform its rules and forms to Section 404(c) of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), as added by Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Section 404(c) of the Sarbanes-Oxley Act provides that Section 404(b) of the Sarbanes-Oxley Act shall not apply with respect to any audit report prepared for an issuer that is neither an accelerated filer nor a large accelerated filer as defined in Rule 12(b)(2) of the Exchange Act. These issuers are often referred to as "non-accelerated filers". Prior to enactment of the Dodd-Frank Act, a non-accelerated filer under existing Commission rules would have been required to include an attestation report of its registered public accounting firm on internal control over financial reporting in the filer's annual report filed with the Commission for fiscal years ending on or after June 15, 2010. Specifically, the conforming amendments remove the requirement for a non-accelerated filer to include the attestation report in its annual report. Section 404(c) of the Sarbanes-Oxley Act also necessitates a conforming change to the disclosure in management's annual report on internal control over financial reporting regarding the inclusion of such attestation report and a conforming change to clarify that Rule 2-02(f) of Regulation S-X only applies when an attestation report on internal control over financial reporting is included in the annual report. The amendments would still permit a non-accelerated filer to include an auditor's attestation report on internal control over financial reporting voluntarily, if the filer chose to do so.

The full text of the release is posted on the SEC's website. The amendments will take effect upon publication of the release in the Federal Register. (Rel. 33-9142)

ENFORCEMENT PROCEEDINGS

Former Biovail Senior Executive Settles SEC Accounting Fraud Case

The Securities and Exchange Commission announced today that, on Sept. 8, 2010, the Honorable Lewis A. Kaplan of the United States District Court for the Southern District of New York entered a final consent judgment against defendant John Miszuk, Biovail Corporation's former vice president, controller and assistant secretary, in SEC v. Biovail Corp., et al., 08 Civ. 02979, an accounting fraud case the Commission filed on March 24, 2008. Miszuk consented to a final judgment that (i) permanently enjoins him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5 and 13b2-1 and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) and Rules 12b-20, 13a-1 and 13a-16; (ii) requires him to pay a civil penalty in the amount of $75,000; and (ii) bars him from serving as an officer or director of a public company for five years. This settlement resolves all of the Commission's pending charges against Miszuk.

The Commission's complaint alleges, among other things, that, in the second quarter 2003, Biovail and some of its executives, including Miszuk, engaged in two separate accounting fraud schemes that resulted in Biovail materially misstating its financial statements by overstating its revenue and understating its loss for that quarter. The Commission's complaint also alleges that other senior Biovail executives and Biovail violated the antifraud and other provisions of the securities laws in connection with misstatements concerning a third quarter 2003 truck accident as well as a fraudulent scheme concerning an off-balance-sheet, research-and-development vehicle.

Last year, the Commission settled its claims against Biovail former vice president of corporate affairs Kenneth G. Howling by entry on Dec. 21, 2009, of a consent judgment that permanently enjoined Howling from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 and imposed a civil penalty in the amount of $50,000. Biovail previously settled with the Commission by consenting to a judgment that, among other things, permanently enjoined it from violating antifraud and other provisions of the federal securities laws, imposed a $10 million civil penalty, and ordered it to pay disgorgement of $1.

The Commission's case against former Biovail chairman and chief executive officer Eugene N. Melnyk and former chief financial officer Brian Crombie remains pending. [SEC v. Biovail Corp., et al., 08 Civ. 02979 (LAK) (S.D.N.Y.)] (LR-21650)

Judgment of Permanent Injunction and Other Relief Entered Against Defendant William H. Center

The Commission announced that on Aug.13, 2010, the Honorable Daniel T.K. Hurley, United States District Court Judge for the Southern District of Florida, entered a judgment of permanent injunction and other relief against Defendant William H. Center. The judgment enjoins Center from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, Section 15(a) of the Exchange Act and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In addition to injunctive relief, the judgment orders Center to pay disgorgement and a civil penalty, in an amount to be determined at a later date. Center consented to the entry of the judgment without admitting or denying any of the allegations in the complaint.

On June 22, 2010, the Commission filed its complaint and charged Center and others with fraud for running a Ponzi scheme. [SEC v. Trade-LLC, et al., Civil Action No. 10-80737-CV-Hurley/Hopkins (S.D. Fla.) (LR-21651)

Stephen F. Owens, William Woo, Eric Ko, Asmac Financial, Inc. and Edify Capital Group, Inc. Settle Charges

The Securities and Exchange Commission announced today that, on Aug. 11, 2010, the United States District Court for the Central District of California entered Final Judgments by consent against defendants Stephen F. Owens of Corona, California, William Woo of San Gabriel, California, Eric Ko of Brea, California, ASMAC Financial, Inc. (ASMAC) and Edify Capital Group, Inc. (Edify). The Commission also voluntarily dismissed Flinn Springs Inn, Inc. (Flinn Springs) as a relief defendant in the lawsuit.

In the complaint filed on Aug. 6, 2008, the Commission alleged that Global Materials & Services, Inc. (Global Materials) improperly registered the offer and sale of shares issued under consulting programs on Form S-8 registration statements in order to raise money for the personal benefit of Owens, who at the time controlled Global Materials as its officer and director. Between 2002 and 2005, under the direction of Owens, the company allegedly engaged in two fraudulent schemes under which it issued billions of S-8 shares to sham consultants, including defendants Woo, Ko, ASMAC and Edify (collectively, the Consultant Defendants). The complaint alleges that, contrary to the requirements of Form S-8, the Consultant Defendants did not perform any bona fide consulting services to Global Materials in exchange for the S-8 shares they received. Instead, they sold the S-8 shares and routed over $1.7 million of the sale proceeds back to Owens and entities controlled by Owens, including Flinn Springs.

Without admitting or denying the complaint's allegations, all of the defendants consented to the entry of Final Judgments enjoining them from violating Section 5 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Owens also agreed to be enjoined from violating Section 17(a) of the Securities Act, prohibited from acting as an officer or director of an issuer pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, permanently barred from participating in a penny stock offering pursuant to Section 20(g) of the Securities Act and Section 21(d)(6) of the Exchange Act, and ordered to pay $1,738,081 in disgorgement plus $784,458 in prejudgment interest and a civil penalty of $120,000. In addition to the injunction, Woo agreed to pay $327,938 in disgorgement plus $148,709 in prejudgment interest, for a total of $476,647, of which $133,995 will be owed jointly and severally with ASMAC, and a civil penalty of $120,000. Ko also agreed to pay a civil penalty of $20,000, and ASMAC agreed to disgorge $91,361 plus $42,634 in prejudgment interest, for a total of $133,995, for which it will be jointly and severally liable with Woo. With this settlement and the voluntary dismissal of Flinn Springs, the action is fully resolved as to all defendants.

For more information on earlier actions in this case, see Litigation Release Number 20673 (Aug. 7, 2008). [SEC v. Global Materials & Services, Inc., et al, Case No. SACV 08-881 DOC (RNBx) (C.D. Cal.)] (LR-21652)

INVESTMENT COMPANY ACT RELEASES

American Capital, Ltd.

A notice has been issued giving interested persons until Oct. 7, 2010 to request a hearing on an application filed by American Capital, Ltd. for an order under Section 61(a)(3)(B) of the Investment Company Act approving applicant's proposal to grant certain stock options to non-employee directors under applicant's 2009 stock option plan. (Rel. IC-29416 - September 14)

SELF-REGULATORY ORGANIZATIONS

Proposed Rule Change

The National Securities Clearing Corporation filed a proposed rule change (SR-NSCC-2010-09) under Section 19(b)(1) of the Securities Exchange Act of 1934. The proposed rule change would modify NSCC's rules and procedures regarding the creation of a Universal Trade Capture application and an automated Special Representative facility. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62882)

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by NASDAQ OMX PHLX relating to market data feeds (SR-Phlx-2010-121) 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 20. (Rel. 34-62887)

A proposed rule change filed by the NASDAQ Stock Market to modify fees for members using the NASDAQ Market Center (SR-NASDAQ-2010-113) 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 20. (Rel. 34-62893)

The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-CBOE-2010-083) filed by Chicago Board Options Exchange under Rule 19b-4 of the Securities Exchange Act of 1934 relating to the complex order book. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62897)

A proposed rule change filed by NASDAQ OMX PHLX to establish a new FLEX Options pilot program (SR-Phlx-2010-123) 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 20. (Rel. 34-62900)

A proposed rule change filed by BATS Exchange to adopt BATS Rule 2.12, entitled "BATS Trading, Inc. as Inbound Router," and to make related changes (SR-BATS-2010-024) 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 20. (Rel. 34-62901)

A proposed rule change filed by Chicago Board Options Exchange to waive transaction fee for public customer orders in SPDR options executed in open outcry or in the Automated Improvement Mechanism (SR-CBOE-2010-081) 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 20. (Rel. 34-62902)

A proposed rule change filed by the NASDAQ Stock Market to modify Rule 7019 (SR-NASDAQ-2010-110) 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 20. (Rel. 34-62907)

A proposed rule change filed by the NASDAQ Stock Market to establish an optional depth data enterprise license fee (SR-NASDAQ-2010-111) 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 20. (Rel. 34-62908)

Approval of Proposed Rule Change

The Commission approved a proposed rule change (SR-CBOE-2009-075), as modified by Amendment Nos. 1 and 2 thereto, submitted by Chicago Board Options Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to establish a pilot program to list P.M.-settled end of week and end of month expirations for options on broad-based indexes. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62911)

JOINT INDUSTRY PLAN RELEASES

Notice of Filing and Immediate Effectiveness of the Fourteenth Charges Amendment to the Second Restatement of the Consolidated Tape Association Plan

Pursuant to Rule 608 under the Securities Exchange Act of 1934, the Participants of the Consolidated Tape Association Plan filed a proposal to amend the CTA Plan (SR-CTA-2010-01) to permanently approval of fees that apply to a vendor's dissemination of a real-time Network B last sale price information ticker over broadcast, cable or satellite television and an update of the automatic annual increase to the amount of the broker-dealer enterprise maximum monthly charge. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62906)

Notice of Filing and Immediate Effectiveness of The Sixteenth Substantive Amendment to the Second Restatement of the Consolidated Tape Association Plan and Twelfth Substantive Amendment to the Restated Consolidated Quotation Plan

Pursuant to Rule 608 under the Securities Exchange Act of 1934, the Participants of the Consolidated Tape Association Plan and Consolidated Quotation Plan filed a proposal to amend the CTA Plan and CQ Plan (SR-CTA/CQ-2010-03) to add EDGA Exchange, Inc. and EDGX Exchange, Inc. to the Plans. Publication is expected in the Federal Register during the week of September 20. (Rel. 34-62912)

SECURITIES ACT REGISTRATIONS

• Latest Securities Act registrations (TXT)

RECENT 8K FILINGS

• Latest 8-K filings (TXT)

http://www.sec.gov/news/digest/2010/dig091610.htm