SEC News Digest

COMMISSION ANNOUNCEMENTS

Senior Supervisors Group Issues Report on Risk Appetite Frameworks and IT Infrastructure

Senior financial supervisors from 10 countries - collectively, the Senior Supervisors Group (SSG) - today issued a report that evaluates how financial institutions have progressed in developing formal risk appetite frameworks and in building out highly developed IT infrastructures and firm wide data aggregation capabilities.

The report - Observations on Developments in Risk Appetite Frameworks and IT Infrastructures - concludes that while firms have made progress in developing risk appetite frameworks and have begun multi-year projects to improve IT infrastructure, considerably more work must be done to strengthen these practices. In particular, the aggregation of risk data remains a challenge, despite its criticality to strategic planning, decision making, and risk management.

The observations and conclusions in the report reflect the findings of initiatives undertaken by two SSG working groups. The risk appetite working group conducted a series of interviews with boards of directors and senior management of global financial institutions to gauge progress in risk appetite frameworks, while the working group that focused on IT infrastructure based its views on observations from a number of existing supervisory efforts.

This report represents a joint effort on the part of twelve supervisory agencies: the Canadian Office of the Superintendent of Financial Institutions, the French Prudential Control Authority, the German Federal Financial Supervisory Authority, the Bank of Italy, the Japanese Financial Services Agency, the Netherlands Bank, the Bank of Spain, the Swiss Financial Market Supervisory Authority, the U.K. Financial Services Authority, and, in the United States, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and the Federal Reserve.

These initiatives were conducted to support the priorities of the Financial Stability Board, whose mission is to address vulnerabilities in the financial system and to promote global financial stability. (Press Rel. 2010-256)

Statement From Chairman Schapiro on Appointment of FASB Chairman

The following is a statement from SEC Chairman Mary L. Schapiro regarding today's announcement by the Board of Trustees of the Financial Accounting Foundation that the Financial Accounting Standards Board (FASB) has appointed Leslie F. Seidman as FASB Chairman, effective Jan. 1, 2011. Ms. Seidman has been a FASB member since July 2003 and has served as Acting Chairman since Oct. 1, 2010.

"I welcome the appointment of Ms. Seidman as FASB Chairman and would like to commend her for her continued service. Her experience will facilitate the progress of important initiatives on the FASB agenda as they seek to continually improve the quality of financial reporting standards for the benefit of investors." (Press Rel. 2010-257)

ENFORCEMENT PROCEEDINGS

In the Matter of Aaron Riddle

On December 23, 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 Aaron Riddle (Riddle). The Order finds that Riddle was a founding member and the Chief Financial Officer of Jadis Capital, Inc. (Jadis Capital), a New York corporation. Jadis Capital was the sole owner of Jadis Investments, LLC (Jadis Investments), a Delaware limited liability company and Uniondale, Long Island-based investment adviser registered with the Commission. Riddle was a controlling member and the Chief Financial Officer and First Vice President of Jadis Investments.

The Order further finds that Riddle pled guilty to conspiracy to commit securities fraud, in violation of Title 18 United States Code, Section 371 before the United States District Court for the Eastern District of New York. On August 5, a judgment was entered against Riddle. He was sentenced to a prison term of 36 months followed by three years of supervised release and ordered to make restitution in the amount of $12,334,614.41.

Based on the above, the Order bars Riddle from association with any investment adviser. Riddle consented to the issuance of the Order without admitting or denying any of the findings in the Order, except for the Commission's jurisdiction over him and the subject matter of the proceedings and his criminal conviction, which he admitted. (Rel. IA-3127; File No. 3-14172)

In the Matter of Edward Tamimi

An Administrative Law Judge has issued an Order Making Findings and Imposing Remedial Sanction by Default (Default Order) in Administrative Proceeding No. 3-14098, Edward Tamimi. The Order Instituting Proceedings (OIP) alleged that Tamimi participated in a fraudulent offering of unregistered securities. It further stated that, on Oct. 15, 2010, the U.S. District Court for the Southern District of Florida entered a final judgment against Tamimi, permanently enjoining him from future violations of several registration and antifraud provisions of the federal securities laws.

The Default Order finds the allegations of the OIP to be true. It concludes that, pursuant to Section 15(b)(6) of the Exchange Act of 1934, it is in the public interest to bar Tamimi from association with any broker or dealer. (Rel. 34-63605; File No. 3-14098)

Court Freezes Assets Linked to Suspicious Securities Purchases Ahead of Martek Biosciences Corporation Acquisition Announcement

On Dec. 22, 2010, the U.S. District Court for the Southern District of New York entered a Temporary Restraining Order freezing assets and trading proceeds of certain unknown purchasers of the securities of Martek Biosciences Corporation (Unknown Purchasers). The Commission filed a complaint alleging that the Unknown Purchasers engaged in illegal insider trading in the days preceding the Dec. 21, 2010 announcement that Royal DSM N.V., a Dutch company, and Martek, a Columbia, Maryland company, had entered into an agreement under which DSM would acquire all of the outstanding common stock of Martek at a 35% premium over the previous day's closing price. The Commission's complaint alleges that the Unknown Purchasers, through their insider trading, violated the antifraud insider trading provisions of the Securities Exchange Act of 1934. The complaint seeks permanent injunctive relief, the disgorgement of all illegal profits, and the imposition of civil monetary penalties.

The Commission's complaint alleges that between Dec. 10, 2010 and Dec. 15, 2010, the Unknown Purchasers bought 2,615 Martek call option contracts through a UBS account. The Unknown Purchasers' buys comprised over 90% of the volume for these contracts on those days. The complaint further alleges that, after the acquisition announcement, the price of Martek common stock increase 36% from the previous day's closing price. The value of the call options held by the Unknown Purchasers rose dramatically during the day. In one instance, the options increased 2,500% in value. The complaint alleges that, as a result, the Unknown Purchasers are in a position to realize total profits of approximately $1.2 million from the sale of the call options.

In addition to freezing the assets related to the trading, the Temporary Restraining Order requires the Unknown Purchasers to identify themselves, imposes an expedited discovery schedule, and prohibits the defendants from destroying documents. [SEC v. One or More Unknown Purchasers of Securities of Martek Biosciences Corporation, 10 Civ. 9527 (WHP) (S.D.N.Y.)] (LR-21792)

SELF-REGULATORY ORGANIZATIONS

Approval of Proposed Rule Changes

The Commission issued notice and approved on an accelerated basis a proposed rule change submitted by the Chicago Stock Exchange (SR-CHX-2010-25) pursuant to Rule 19b-4 under the Securities Exchange Act to eliminate the validated cross trade entry functionality. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63564)

The Commission approved a proposed rule change (SR-NSCC-2010-11) filed by the National Securities Clearing Corporation under Section 19(b)(1) of the Exchange Act. The approved rule change modifies and enhances NSCC's Reconfirmation and Pricing Service (RECAPS) and renames the service the Obligation Warehouse (OW) service. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63588)

The Commission granted approval of a proposed rule change (SR-NYSEArca-2010-98) submitted by NYSE Arca under Rule 19b-4 of the Securities Exchange Act of 1934 relating to the listing and trading of the WisdomTree Managed Futures Strategy Fund. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63598)

The Commission granted approval of a proposed rule change (SR-MSRB-2010-16) submitted by the Municipal Securities Rulemaking Board pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, consisting of amendments to Rule G-5, on disciplinary actions by appropriate regulatory agencies, remedial notices by registered securities associations; and Rule G-17, on conduct of municipal securities activities. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63599)

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by the Chicago Board Options Exchange to modify how odd-lots are handled on CBSX (SR-CBOE-2010-115) 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 December 27. (Rel. 34-63566)

A proposed rule change (SR-CBOE-2010-114) filed by Chicago Board Options Exchange relating to the Hybrid Opening System 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 December 27. (Rel. 34-63580)

A proposed rule change filed by NYSE Arca amending various NYSE Arca Equities Rules to harmonize them with Financial Industry Regulatory Authority Rules (SR-NYSEArca-2010-88) 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 December 27. (Rel. 34-63584)

A proposed rule change filed by EDGX Exchange (SR-EDGX-2010-24) to amend EDGX Rule 11.5 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 December 27. (Rel. 34-63589)

A proposed rule change filed by EDGA Exchange (SR-EDGA-2010-25) to amend EDGA Rule 11.5 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 December 27. (Rel. 34-63590)

A proposed rule change filed by NASDAQ OMX BX (SR-BX-2010-091) to continue the practice governing the Directed Order Process on BOX 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 December 27. (Rel. 34-63591)

The Commission issued notice of filing and immediate effectiveness of proposed rule change (SR-BX-2010-090) filed by NASDAQ OMX BX under Rule 19b-4 of the Securities Exchange Act of 1934 to amend the BOX trading rules to permit trading options on leveraged (multiple or inverse) exchange-traded notes and broaden the definition of "futures-linked securities". Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63592)

A proposed rule change filed by the New York Stock Exchange (SR-NYSE-2010-83) making permanent the pilot program that offers liquidity takers a reduced transaction fee structure for certain bond trades executed on the NYSE Bonds System 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 December 27. (Rel. 34-63593)

A proposed rule change filed by NASDAQ OMX PHLX (SR-Phlx-2010-179) relating to the cancellation fee 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 December 27. (Rel. 34-63595)

A proposed rule change filed by NYSE Amex (SR-NYSEAmex-2010-124) extending the operation of the pilot program that allows Nasdaq Stock Market securities to be traded on the Exchange pursuant to a grant of unlisted trading privileges 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 December 27. (Rel. 34-63601)

Proposed Rule Changes

The Commission has issued a notice of filing of Amendment No. 2 to a proposed rule change (SR-EDGA-2010-18) submitted by EDGA Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend the proposed rule change relating to Step-Up Orders. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63572)

The Commission has issued a notice of filing of Amendment No. 2 to a proposed rule change (SR-EDGX-2010-17) submitted by EDGX Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to amend the proposed rule change relating to Step-Up Orders. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63574)

NYSE Arca filed a proposed rule change (SR-NYSEArca-2010-118) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the listing and trading of the SiM Dynamic Allocation Diversified Income ETF and SiM Dynamic Allocation Growth Income ETF. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63587)

NASDAQ OMX PHLX filed a proposed rule change (SR-Phlx-2010-183) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to expand its Short Term Option Program. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63594)

Designation of Longer Period for Commission Action on a Proposed Rule

The Commission has designated a longer period for Commission action under Section 19(b)(2) of the Securities Exchange Act of 1934 on a proposed rule change (SR-FINRA-2010-055) filed by Financial Industry Regulatory Authority to amend FINRA Rule 6140 (Other Trading Practices). Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63582)

Amendment to Proposed Rule Change

NASDAQ OMX BX filed Amendment No. 1 to a proposed rule change under Rule 19b-4 (SR-BX-2010-059) to create a listing market on the exchange. Publication is expected in the Federal Register during the week of December 27. (Rel. 34-63597)

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