SEC News Digest

Enforcement Proceedings

Final Judgment Entered Against Defendant in SEC Action Involving Rhode Island-Based Offering Fraud

On January 2, 2013, the Securities and Exchange Commission announced the resolution of an enforcement action filed by the Commission on October 19, 2010 in federal district court in Rhode Island against defendants David G. Stern and Online-Registries, Inc. (d/b/a Online Medical Registries) (“OMR”) and relief defendant Michele Ritter.  The court entered final judgment by consent against Stern on December 5, 2012 and entered a stipulation of dismissal of the claims against the relief defendant on December 27, 2012.  The court previously had entered a final judgment by default against OMR on September 25, 2012.

The Commission’s complaint alleged that Stern and OMR made false and misleading statements to investors in OMR, a web-based company founded and controlled by Stern, in connection with investors’ purchase of stock in OMR.  The misrepresentations generally related to OMR’s business ventures, the status of its technology, its number of customers, and Stern’s personal background, consisting of disbarment from the practice of law and a prior criminal conviction in federal district court in Massachusetts relating to financial wrongdoing.  Based upon these and other allegations, including the misuse of investor funds, the Commission obtained a temporary restraining order and asset freeze on October 20, 2010, and a stipulated preliminary injunction on February 28, 2011 against Stern and OMR.  On April 3, 2012, the court held Stern in contempt for violations of the preliminary injunction.   

 Without admitting or denying the allegations in the Commission’s complaint, Stern agreed to the entry of a final judgment that: (i) permanently enjoins him from violating Section 17(a) of the Securities Act of 1933 (the “Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder; (ii) holds him liable for disgorgement of $197,875, representing amounts received as a result of the conduct alleged in the Commission’s complaint, together with prejudgment interest thereon in the amount of $27,800.71, for a total of $225,675.71; and (iii) waives the payment of disgorgement and prejudgment interest and does not impose a civil penalty based upon the representations in Stern’s sworn statement of financial condition.  The final judgment by default entered against OMR (i) enjoins OMR from violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder and (ii) orders OMR to pay disgorgement of $197,875 and prejudgment interest in the amount of $24,997.22.  The Commission had initially charged that relief defendant Michele Ritter received some investor funds from Stern and sought the return of those funds.  The Commission has now agreed to dismiss its charges against relief defendant Michele Ritter. [SEC v. Online-Registries, Inc. and David G. Stern, 10-CA-433-M-DLM (District of Rhode Island)] (LR-22583)

INVESTMENT COMPANY ACT RELEASES

Notice of Applications for Deregistration under the Investment Company Act of 1940

For the month of December 2012, a notice has been issued giving interested persons until January 22, 2013, to request a hearing on any of the following applications for an order under Section 8(f) of the Investment Company Act of 1940 declaring that the applicant has ceased to be an investment company:

• Yacktman Fund Inc. [File No. 811-6628]
• Dreyfus BASIC U.S. Government Money Market Fund [File No. 811-6606]
• Build America Bond Portfolio [File No. 811-22351]
• Global Growth Portfolio [File No. 811-7303]
• Multi-Sector Portfolio [File No. 811-22295]
• Eaton Vance National Municipal Income Trust [File No. 811-9143]
• Cash Management Portfolio [File No. 811-8390]
• Bhirud Funds Inc. [File No. 811-6680]
• Tax Managed Mid Cap Core Portfolio [File No. 811-10597]
• Special Equities Portfolio [File No. 811-8594]
• Small-Cap Portfolio [File No. 811-9915]
• Elite Group of Mutual Funds [File No. 811-4804]
• Delaware Investments Arizona Municipal Income Fund, Inc. [File No. 811-7412]
• Delaware Group Tax Free Money Fund [File No. 811-3120]
• Washington National Variable Annuity Fund A [File No. 811-1661]

(Rel. IC-30332 - December 28)

Mutual of America Life Insurance Company, et al.

An order has been issued on an application filed by Mutual of America Life Insurance Company, Wilton Reassurance Life Company of New York, Mutual of America Separate Account No. 2, Mutual of America Separate Account No. 3, American Separate Account No. 2, and American Separate Account No. 3 (collectively, Section 26 Applicants) and Mutual of America Investment Corporation (together with Section 26 Applicants, Section 17 Applicants). Section 26 Applicants have been authorized under Section 26(c) of the Investment Company Act of 1940 (1940 Act) to substitute securities issued by certain registered investment companies for shares of certain other registered investment companies. In addition, Section 17 Applicants have been granted an exemption from Section 17(a) of the 1940 Act in order to engage in certain in-kind transactions in connection with the substitutions so authorized.  (Rel. IC-30335 - December 31)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change (SR-CBOE-2012-127) filed by Chicago Board Options Exchange, Incorporated, relating to the Exchange 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 December 31.  (Rel. 34-68550 )

A proposed rule change (SR-MIAX-2012-04) filed by the Miami International Securities Exchange LLC, to extend 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 December 31.  (Rel. 34-68551 )

A proposed rule change (SR-C2-2012-045), filed by C2 Options Exchange, Incorporated, relating to the Exchange 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 December 31.  (Rel. 34-68552 )

Fixed Income Clearing Corporation (“FICC”) filed a proposed rule change (SR-FICC-2012-10) under Section 19(b)(3)(A) of the Securities Exchange Act of 1934, which became effective upon filing, to remove the fee related to the DTCC GCF Repo Index® from the Fee Structure of the Government Securities Division. Publication is expected in the Federal Register during the week of December 31.  (Rel. 34-68553 )

A proposed rule change filed by the EDGX Exchange, Inc. (SR-EDGX-2012-48) 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 December 31.  (Rel. 34-68554 )

SECURITIES ACT REGISTRATIONS

Registration statements were not listed for today’s Digest.

RECENT 8K FILINGS

8-K filings were not listed for today’s Digest.

http://www.sec.gov/news/digest/2012/dig010213.htm