SEC News Digest

COMMISSION ANNOUNCEMENTS

Chief Accountant is Seeking Candidates for Five Professional Accounting Fellow Positions

The Securities and Exchange Commission's Office of the Chief Accountant is now accepting applications for Professional Accounting Fellow (PAF) positions. The PAF program, which began in 1972, is designed to provide participating fellows with outstanding opportunities for public service to investors, personal development, and career advancement. During their fellowship, the successful candidates will be involved in the study and development of rule proposals under the federal securities laws, liaison with accounting, auditing and other professional standard-setting bodies, and consultation with registrants on reporting matters. The Office of the Chief Accountant plans to select up to five candidates for the following positions:

• The Office of the Chief Accountant's Accounting Group would like to select candidates with significant experience in the application of US GAAP and/or International Financial Reporting Standards (areas of specialty may include, but are not limited to, accounting topics such as revenue recognition, compensation, business combinations, and financial instruments);

• The Office of the Chief Accountant's Accounting Group would also like to select candidate(s) with significant experience in performing and reviewing valuations for financial reporting purposes (areas of specialty may include, but are not limited to, business enterprise valuations, financial instruments and other complex securities, along with intangible assets);

• The Office of the Chief Accountant's Professional Practice Group would like to select candidate(s) with significant experience analyzing and implementing auditing, independence, and/or quality control standards (areas of specialty may include, but are not limited to, internal control over financial reporting, audits of broker-dealers and auditing of complex financial instruments).

Interested applicants should submit:

• a resume;

• Form OF-612, "Optional Application for Federal Employment," or any other written format that clearly identifies the title (Professional Accounting Fellow) and grade (SK16-14) of the job for which the applicant is applying; and

• at least two letters of recommendation from non-relatives.

Form OF-612 and "Applying for a Federal Job," which highlights the information to be included in the resume or other written submission, can be obtained from the Office of Administrative and Personnel Management, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C., 20549. Form OF-612 is also available on the Internet at http://www.opm.gov.

Applicants are required to submit an eight to twelve page essay that they have prepared on their own on a subject directly related to a current accounting or auditing topic. While no restriction is placed on the essay topic, applicants should consider focusing their essay on a particular technical topic and supplementing their technical discussion with a consideration of one or more interrelated policy-level issues. Applicants are encouraged to consider selecting any current accounting or auditing topic on which they possess expertise.

The application and essay should be submitted on or before Jan. 13, 2011, to the Chief Accountant of the Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C., 20549. In addition to the hard copy, applicants should also submit a CD that includes their essay and resume in electronic form. Inquiries about the program may be addressed to the attention of Josh Paul or Jason Plourde in the Office of the Chief Accountant at (202) 551-5851 and (202) 551-5323, respectively.

The Commission's policy of affording equal employment opportunity to all interested candidates will be followed.

ENFORCEMENT PROCEEDINGS

Commission Revokes Registration of Securities of Southeast Banking Corp. for Failure to Make Required Periodic Filings

On September 27, the Commission revoked the registration of each class of registered securities of Southeast Banking Corp. (STBPQ) 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, STBPQ 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 Southeast Banking 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 STBPQ's securities pursuant to Section 12(j) of the Exchange Act. This Order settled the charges brought against STBPQ in In the Matter of Geotec, Inc., et al., Administrative Proceeding File No. 3-13999.

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 Geotec, Inc., et al., Administrative Proceeding File No. 3-13999, Exchange Act Release No. 62676 (Aug. 10, 2010). (Rel. 34-62994; File No. 3-13999)

SEC Obtains Order to Show Cause Re Civil Contempt Against Defendant Alfred Louis "Bobby" Vassallo, Jr.

The Securities and Exchange Commission announced that on Sept. 24, 2010, the Honorable Chief Judge Irma E. Gonzalez of the U.S. District Court for the Southern District of California issued an Order to Show Cause against Alfred Louis Vassallo, Jr. aka Bobby Vassallo (Vassallo) requiring Vassallo to show cause why he should not be held in civil contempt for violating the Court's Permanent Injunction entered against him on Aug. 24, 2005. A hearing on the Order to Show Cuase is set for Oct. 7, 2010.

The Court's Order follows from the Commission's Application for an Order to Show Cause, filed on Sept. 21, 2010, which alleged that Vassallo violated the Court's Permanent Injunction enjoining him from engaging in the offer and sale of unregistered securities in violation of the securities registration provisions and committing fraud in connection with the offer and sale of securities in violation of the antifraud provisions of the federal securities laws. The Commission's Application further alleged that Vassallo violated the Permanent Injunction by failing to disgorge his ill-gotten gains and pay civil penalties and other monetary relief to the Court-appointed Receiver for Presto Telecommunications, Inc. (Presto).

The Commission's Application seeks an order finding Vassallo in civil contempt, an order freezing his assets, an order prohibiting the destruction of documents, an order expediting discovery, an order requiring him to provide an accounting and to repatriate funds, and an order requiring Vassallo to surrender his passport until his contempt is purged through compliance with the Permanent Injunction.

The Commission previously filed a complaint against Vassallo and Presto on Jan. 27, 2004 that charged Vassallo with violating the securities registration provisions of Section 5 of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder for Vassallo's role in perpetrating a fraudulent scheme through Presto, which the Receiver for Presto calculated raised about $20 million from more than 500 investors. [SEC v. Presto Telecommunications, Inc., et al., United States District Court for the Southern District of California, Case No. 04CV00162IEG] (LR-21662)

SEC Charges Four Individuals for Scheme to Manipulate the Market for Two Microcap Stocks

The Commission announced today that it charged four individuals and one entity involved in a scheme to manipulate the market in two separate microcap stocks — Exit Only, Inc. and CX2 Technologies, Inc.

The Commission's complaint, filed in federal district court in Philadelphia, alleges that, from at least January 2008 through March 2008, Mark Johnson of Baltimore, Maryland, Mark Manoff of Wayne, Pennsylvania, Leonard Gotshalk of Ashland, Oregon, and Kyle Gotshalk of Canyon Country, California, the President and Chief Executive Officer of Exit Only, Inc., engaged in a scheme to manipulate the market for the purpose of artificially inflating each company's stock price and to create the false appearance of an active and liquid market. The defendants entered into agreements with individuals they believed would generate purchases of each company's stock in exchange for the payment of cash kickbacks. Unbeknownst to the defendants, they had actually entered into agreements with a witness secretly cooperating with the government and an undercover Special Agent of the Federal Bureau of Investigation (FBI). The complaint alleges that, to effectuate this scheme, defendants provided information regarding press releases before being issued to the public, nonpublic shareholders lists, and paid cash kickbacks to generate purchases of 539,000 shares of stock in Exit Only, Inc. and CX2 Technologies, Inc.

The complaint charges violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks permanent injunctions against all defendants, and disgorgement of ill-gotten gains, together with prejudgment interest, civil penalties, and penny stock bars against the individual defendants.

The Commission acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Eastern District of Pennsylvania and the FBI. [SEC v. Mark Johnson, et al., Civil Action No. 10-cv-5014 (E.D.Pa.)] (LR-21663)

Final Judgment Setting Disgorgement and Prejudgment Interest and Imposing Civil Penalty Entered Against Defendant Mark E. Salyer and Relief Defendants, Salmar Investors Group, LLC and Horizon Holdings, Inc.

The Securities and Exchange Commission announced that on Aug.18, 2010, the United States District Court for the Eastern District of Tennessee entered a Final Judgment Setting Disgorgement and Prejudgment Interest and Imposing Civil Penalty against defendant Mark E. Salyer (Salyer) and relief defendants, Salmar Investors Group, LLC (Salmar) and Horizon Holdings, Inc. (Horizon Holdings). As amended on Sept. 21, 2010, the Final Judgment holds Salyer, Salmar, and Horizon Holdings jointly and severally liable for disgorgement of ill-gotten gains they received as a result of violations of the federal securities laws, together with prejudgment interest thereon, for a total disgorgement of $6,284,819.37. In addition, the court ordered Salyer to pay a civil penalty of $130,000 pursuant to Sections 20(d) of the Securities Act of 1933 (Securities Act) and Section 21(d) of the Securities Exchange Act of 1934 (Exchange Act).

Previously, the Commission filed a complaint against Salyer, Salmar, and Horizon Holdings alleging violations of the antifraud provisions of the federal securities law in connection with Salyer's misappropriation of millions of dollars from customers of MetLife Securities, Inc. (MetLife) where he was formerly employed as a registered representative. Salyer controlled both Salmar and Horizon Holdings which received funds fraudulently diverted by Salyer from several MetLife customer accounts. MetLife is a broker-dealer and investment adviser registered with the Commission. Salyer previously consented to a judgment that permanently enjoins him from future violations of Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. [Securities and Exchange Commission v. Mark E. Salyer, et al., Case No.:2:08-CV-179 (E.D. Tenn.)] (LR-21664)

SEC Files Settled Insider Trading Action Involving XTO Energy Securities

On Sept. 24, 2009, the Securities and Exchange Commission filed an insider trading action in the United States District Court in Fort Worth, Texas against Michael Jobe and Richard Vlasich. The Commission alleges that Jobe and Vlasich engaged in unlawful insider trading in the securities of XTO Energy, Inc.

The Commission's complaint alleges as follows: in early December 2009, Jobe learned from an XTO Energy employee that Exxon Mobil would be acquiring XTO Energy. Despite assurances to the employee that he would not trade on the information and would not to tell anyone else about the deal, Jobe did both. Jobe purchased XTO Energy stock and call options the week before the Dec. 14, 2009, announcement that Exxon Mobil would acquire XTO Energy. He also told Vlasich that XTO Energy would be acquired and advised Vlasich to purchase XTO Energy securities. Vlasich purchased XTO Energy call options prior to the December 14 announcement. As a result of this trading activity in XTO Energy securities, Jobe and Vlasich earned profits of $107,220 and $466,295.90, respectively.

Without admitting or denying the complaint's allegations, Jobe and Vlasich each has agreed to settle the Commission's charges by consenting to the entry of a final judgment. Jobe has agreed to be permanently enjoined from further violations of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, to pay $107,220 in disgorgement and $1,433.17 in prejudgment interest, and to pay a $100,000 civil penalty. The amount of Jobe's penalty is based on his financial condition. Vlasich has agreed to be permanently enjoined from further violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and to pay $466,295.90 in disgorgement and $6,232.82 in prejudgment interest. Vlasich is not paying a civil penalty based on his agreement to cooperate in the Commission's investigation and any related enforcement action. [SEC v. Michael Jobe and Richard Vlasich, Civil Action No. 4:10-cv-711-Y (NDTX) (Fort Worth Division)] (LR-21665)

SELF-REGULATORY ORGANIZATIONS

Proposed Rule Changes

The Options Clearing Corporation filed a proposed rule change (SR-OCC-2010-16) under Section 19(b)(1) of the Securities Exchange Act of 1934. The proposed rule change would accommodate options that expire (a) on any Friday of a calendar month other than the third Friday of a calendar month or (b) on the last trading day of a calendar month. Publication is expected in the Federal Register during the week of September 27. (Rel. 34-62942)

The Chicago Board Options Exchange filed a proposed rule change (SR-CBOE-2010-084) pursuant to Section 19b-4 under the Securities Exchange Act of 1934 regarding registration and qualification requirements. Publication is expected in the Federal Register during the week of September 27. (Rel. 34-62977)

The Depository Trust Company filed a proposed rule change (SR-DTC-2010-12) under Section 19(b)(1) of the Securities Exchange Act of 1934 to replace the manual approval process whereby trustees of an issue received access to DTC's Security Position Report (SPR) service with an automated approval system. Publication is expected in the Federal Register during the week of September 27. (Rel. 34-62990)

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by the Chicago Stock Exchange (SR-CHX-2010-20) to change the provide credit for transactions involving issues priced less than 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 September 27. (Rel. 34-62980)

A proposed rule change filed by the Chicago Board Options Exchange to modify the fees schedule for its CBOE Stock Exchange (SR-CBOE-2010-086) 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 27. (Rel. 34-62981)

A proposed rule change filed by the Financial Industry Regulatory Authority (SR-FINRA-2010-047) to update rule cross-references and make non-substantive technical changes to certain FINRA rules 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 27. (Rel. 34-62983)

A proposed rule change filed by NYSE Amex (SR-NYSE Amex-2010-92) amending Rule 4560 - NYSE Amex Equities to correspond with a rule change filed by the Financial Industry Regulatory Authority 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 27. (Rel. 34-62987)

A proposed rule change filed by New York Stock Exchange (SR-NYSE -2010-68) amending NYSE Rule 4560 to correspond with a rule change filed by the Financial Industry Regulatory Authority 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 27. (Rel. 34-62989)

Approval of Proposed Rule Change

The Commission approved a proposed rule change filed by the Municipal Securities Rulemaking Board (SR-MSRB-2010-06) under Section 19(b)(2) of the Securities Exchange Act of 1934, as modified by Amendment No. 1 Thereto, to Establish a Subscription to the Information Collected by the MSRB's Short-term Obligation Rate Transparency (SHORT) System. Publication is expected in the Federal Register during the week of September 27. (Rel. 34-62993)

SECURITIES ACT REGISTRATIONS

• Latest Securities Act registrations (TXT)

RECENT 8K FILINGS

• Latest 8-K filings (TXT)

http://www.sec.gov/news/digest/2010/dig092710.htm