SEC NEWS DIGEST Issue 2003-46 March 11, 2003 COMMISSION ANNOUNCEMENTS SEC, NASD, NYSE RELEASE FINDINGS OF BREAKPOINT EXAMINATION SWEEP; BROKER- DEALERS TO REVIEW TRANSACTIONS Securities regulators issued a report today showing that nearly one in three transactions in front-end load mutual funds that appeared eligible for a breakpoint discount did not receive one, based on the results of a three-month examination sweep of selected broker-dealers. The report, issued jointly by the Securities and Exchange Commission, NASD and the New York Stock Exchange, revealed the average discount not provided was $364 per transaction. As a result of those findings, approximately 2,000 broker-dealers are being required to review samples of their front- end load mutual fund purchase transactions and report the results to NASD. From November 2002 through January 2003, SEC, NASD and NYSE examiners reviewed thousands of mutual fund transactions by 43 broker-dealers that sell front-end load funds. Examiners found significant failures to deliver "breakpoint" sales load discounts to eligible customers among the transactions reviewed. Typically, breakpoint discounts are applied to front-end load funds to reduce sales loads at the investment levels of $50,000, $100,000, $250,000, $500,000 and $1 million. Industry figures show that less than seven percent of all mutual fund sales in 2002 were of front-end load funds. The limited nature of the examination sweep does not allow regulators to determine the full extent of the breakpoint issue industry-wide. Accordingly, NASD is requiring broker-dealers selling front-end load mutual funds to assess their own compliance using a specified sampling methodology, developed in conjunction with the SEC. That methodology will be forwarded to broker dealers shortly. In addition, examiners are following up with the firms already examined to determine whether deficiencies are being corrected and that excessive sales load charges are being refunded to customers. Major examination findings include: * Nearly one in three transactions that appeared eligible for a breakpoint discount or sales charge waiver did not receive one; * Most firms failed to provide breakpoint discounts in at least some instances. Three firms did not provide a discount on any of the sampled transactions that were eligible for a discount. Only two firms provided customers with all available discounts; * The average discount not provided was $364 per transaction; * Most breakpoint problems did not appear to be intentional failures to apply sales load discounts. The most frequent causes were: not linking a customer's ownership of different funds in the same mutual fund family to reach the breakpoint amount (44 percent), and not linking a customer's purchase of fund shares with shares owned by related persons, such as a spouse or minor children (21 percent). * Breakpoint issues were less frequent in firms that process transactions using paper applications rather than by utilizing electronic order processing. * Many firms can improve their compliance and supervisory systems and controls with respect to breakpoint discounts. Following a December NASD/SEC staff directive to review their breakpoint policies and procedures, most firms report that they are undertaking significant reviews of their supervisory practices and a number have already implemented changes. NASD is leading an industry task force to explore and recommend ways that the mutual fund and broker-dealer industries can prevent breakpoint problems and eliminate errors in sales load calculations in the future. Specifically, the group's participants - NASD, the NYSE, the Investment Company Institute, the Securities Industry Association and industry leaders - are tasked with finding possible universal order processing solutions. Both the SEC and NASD have alerted investors to the breakpoint issue and placed additional information on their Web sites. Investors can learn more about reduced front-end sales loads by going to www.sec.gov/answers/breakpt.htm and www.nasdr.com/alert_breakpoint.htm. Investors can access fund expense calculators at www.sec.gov/investor/tools/mfcc/mfcc-int.htm. Investors who believe they have not received breakpoint discounts to which they were entitled should first contact their brokers and ask that the discount be applied. If a broker does not correct the account or provide a satisfactory explanation, the investor should write a letter to the firm's compliance department and ask for a written response. If that response is not satisfactory, the investor can file a complaint with the SEC online at www.sec.gov/complaint.shtml or with NASD at www.nasdr.com/complaints_file.asp. The full examination sweep report, entitled Joint SEC/NASD/NYSE Report of Examinations of Broker-Dealers Regarding Discounts on Front-End Sales Charges on Mutual Funds, is available at www.sec.gov/news/studies/breakpointrep.htm. (Press Rel. 2003-31) RULES AND RELATED MATTERS AMENDMENT TO THE COLLATERAL REQUIREMENTS IN RULE 15c3-3 On Feb. 14, the Commission adopted an amendment to the collateral requirements in Rule 15c3-3 under the Securities Exchange Act of 1934. Under paragraph (b)(3) of the rule, broker-dealers must provide full collateral consisting of certain specified financial instruments or cash when they borrow fully paid and excess margin securities from customers. The amendment allows broker-dealers to pledge such other collateral as the Commission designates as permissible by order as necessary or appropriate in the public interest and consistent with the protection of investors after giving consideration to the collateral's liquidity, volatility, market depth and location, and the issuer's creditworthiness. The Commission also amended Rule 30-3 in its rules of Organization and Program Management to delegate authority to the Division of Market Regulation to issue such orders. The rule amendments will take effect 30 days from date of their publication in the Federal Register. (Rel. 34-47480; File No. S7-20-02) ENFORCEMENT PROCEEDINGS BARBARA BERRY CONSENTS TO THE ENTRY OF AN ADMINISTRATIVE CEASE-AND-DESIST AND RULE 102(e) ORDER RELATING TO VIOLATIONS OF THE ANTIFRAUD, REPORTING, BOOKS AND RECORDS, AND INTERNAL CONTROLS PROVISIONS OF THE EXCHANGE ACT On March 7, the Commission settled administrative proceedings against Barbara L. Berry, CPA, the former CFO of Hexagon Consolidated Companies of America, Inc. (HCCA), pursuant to Section 21C of the Securities Exchange Act of 1934 (Exchange Act) and Rule 102(e) of the Commissions Rules of Practice. The Commission found that Berry served as chief financial officer of HCCA from November 1996 until August 1997, and as an outside accounting consultant to HCCA until January 1998. During this time, Berry willfully violated the antifraud provisions of the Exchange Act and caused and willfully aided and abetted violations of the reporting, books and records, and internal controls provisions of the Exchange Act. Berry signed HCCA's 1996 annual report and participated in the preparation of other HCCA filings when she knew, or was reckless not knowing, that they contained financial statements with asset values that were materially overstated. Without admitting or denying the Commission's findings, Berry consented to the entry of an order that requires her to cease and desist from committing or causing any violation, and any future violations, of Sections 10(b) and 13(b)(5) of the Exchange Act, and Exchange Act Rules 10b-5 and 13b2-1, and cease and desist from causing any violation, and any future violations, of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1, and 13a-13. The Order also denies Berry the privilege of appearing or practicing before the Commission as an accountant. (Rel. 34-47474; AAE Rel. 1743; File No. 3-11058) COMMISSION SUSTAINS NASD DISCIPLINARY ACTION AGAINST JAMES CHASE On March 10, the Commission sustained NASD disciplinary action against James B. Chase (Chase), of Milwaukee, Wisconsin, formerly a general securities representative and a general securities principal with Collopy & Company, Inc., a former NASD member firm. The NASD fined Chase $25,000, suspended him from association with any NASD member in any capacity for one year, and ordered him to requalify by examination as a general securities representative before re-entering the industry. The Commission found that Chase violated NASD Conduct Rule Conduct Rules 2310 and 2110 by making recommendations to a customer that were unsuitable. Chase's client had no investment experience and her investment account constituted virtually all of her assets. Chase recommended and effected transactions in the client's account that resulted in her entire portfolio being invested in a single, highly speculative security. Thereafter, Chase recommended that the client open a margin account to make further purchases in the same stock. In sustaining the NASD's findings, the Commission noted that it has repeatedly held that over-concentration of investments in one or two stocks and trading on margin are unsuitable for unsophisticated investors who have limited means. Based on its review of the record, the Commission concluded that the sanctions imposed by the NASD were not excessive, oppressive or an unnecessary or inappropriate burden on competition. (Rel. 34-47476; File No. 3-10586) SEC CHARGES AMERICAN TISSUE AND THREE FORMER AMERICAN TISSUE OFFICERS WITH ACCOUNTING FRAUD The Commission filed a civil action Monday against American Tissue Inc. and three of its former officers: former president and chief executive officer Medhi Gabayzadeh, former chief financial officer Edward Stein and former vice president of finance John Lorenz. The SEC's complaint, filed in U.S. District Court for the Eastern District of New York, alleges that: * In 2000 and 2001, a period during which American Tissue offered and sold $165 million of securities to investors, defendants Gabayzadeh, Stein and Lorenz fraudulently and materially inflated American Tissue's revenues and earnings in periodic reports filed with the Commission by improperly capital izing expenses as assets, overvaluing the Company's inventories and creating millions of dollars in phony revenue and accounts receivable through bogus "bill and hold" sales. By fraudulently overstating its assets, American Tissue induced its lenders to continue to extend commercial credit when the Company was no longer creditworthy. * As a consequence of the accounting scheme, American Tissue's annual report on Form 10-K for the fiscal year ending Sept. 30, 2000 reported net income for that year of $24.5 million. In fact, American Tissue had suffered a loss for the period of at least $3.6 million. Similarly, the quarterly report filed by American Tissue for the third fiscal quarter of 2001, ending June 30, 2001, overstated the Company's reported net income of $15.5 million for the first nine months of fiscal 2001 by at least $21.8 million, thereby hiding a loss of at least $6.3 million. The SEC charges American Tissue with violations of the antifraud, reporting, books and records and internal controls provisions of the federal securities laws: Sections 10(b), 13(b)(2)(A) and (B) and 15(d) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 15d-1, and 15d-13 thereunder. Gabayzadeh, Stein and Lorenz are charged with violating or aiding and abetting violations of Sections 10(b), 13(b)(2(A) and (B), 13(b)(5), and 15(d) of the Exchange Act and Rules 10b-5, 12b-20, 13b2-1, 13b2-2, 15d-1 (except Gabayzadeh) and 15d-13 thereunder. The SEC seeks as relief permanent injunctions against all defendants, and civil money penalties and officer and director bars against Gabayzadeh, Stein and Lorenz and disgorgement of ill-gotten gains with prejudgment interest against Gabayzadeh and Stein. The SEC's investigation is continuing. The Commission acknowledges the assistance to its investigation of the U.S. Attorney for the Eastern District of New York. In a separate action, the U.S. Attorney unsealed criminal charges against five individuals in connection with the American Tissue matter, including Gabayzadeh, Stein and Lorenz. [SEC v. American Tissue, Inc., Medhi Gabayzadeh, Edward Stein and John Lorenz, Civil Action No. 03-1162 (Seybert & Orenstein, M. J., E.D. New York] (LR-18022; AAE Rel. 1735) DISTRICT COURT JUDGE GRANTS MOTION FOR SUMMARY JUDGMENT AGAINST FORMER LAW FIRM EMPLOYEE FOR INSIDER TRADING The Commission announced that on June 11, 2002, U.S. District Court Judge Patti Saris granted the Commission's Motion for Summary Judgment against John C. Larrabee (Larrabee), the former Director of Fiduciary Services at the law firm of Bingham, Dana & Gould, which is now known as Bingham McCutchen, LLP (Bingham). Also on June 11, the Court entered a final judgment against Larrabee for insider trading that permanently enjoined him from future violations of Section10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder. D'Angelo previously consented to a permanent injunction, paid disgorgement, plus prejudgment interest totaling $182,052. D'Angelo and Larrabee previously were convicted of nine counts of securities fraud each for their insider trading in the stock of BayBanks. Each was sentenced to 1 year and 9 months in prison. In addition, Larrabee was fined $20,000 and D'Angelo was fined $5,000. [SEC v. John C. Larrabee, Civil Action No. 97-10652-PBS, D. MA] (LR- 18023) COURT ORDERS ARIZONA TRUST AND TRUSTEE TO SHOW WHY THEY SHOULD NOT BE HELD IN CONTEMPT FOR FAILURE TO DISGORGE ILLEGAL PROFITS FROM ROLE IN INTERNET PUMP AND DUMP SCHEME On Feb. 19, 2003, a federal judge in Santa Ana, California, ordered Life Foundation Trust and its trustee Jeannette Wilcher to show cause why they should not be held in civil contempt for their failure to pay over $1 million required by a July 29, 2002 judgment against them. The judgment required payment of $1,191,423 in combined disgorgement of illegal profits and prejudgment interest for defendants' role in a "pump and dump" scheme involving the stock of Hitsgalore.com, Inc. The February 19 Order requires Wilcher to demonstrate to the Court why she should not be incarcerated and forced to surrender her passport for failure to disgorge the illegal profits, and requires Life Foundation Trust to demonstrate why it should not be subject to an escalating daily fine for its failure to disgorge. The Court ordered Wilcher and Life Foundation Trust to appear in Court on March 24, 2003. Hitsgalore was a publicly traded Internet company located in Rancho Cucamonga, California, that maintained a website providing an Internet search engine and leasing advertising space to consumers. On November 28, 2001, the Commission filed an action against Wilcher and Life Foundation Trust along with Hitsgalore and its former president, Stephen J. Bradford. The complaint charged Hitsgalore and Bradford with fraud in connection with several press releases issued by the company between April 16 and May 10, 1999 that contained false and misleading statements about a purported investment in Hitsgalore by Life Foundation Trust. The fraudulent press releases caused a dramatic rise in the price of Hitsgalore's stock, quoted on the OTCBB, from $6.3125 to a high of $20.125. The complaint also charged Life Foundation Trust, a Scottsdale, Arizona, for-profit trust, and Wilcher, a resident of Scottsdale, Arizona, with aiding and abetting Hitsgalore's fraud and illegally selling Hitsgalore stock. The Commission previously settled its claims against Bradford and Hitsgalore. On July 29, 2002, the Honorable Gary L. Taylor, United States District Judge for the Central District of California, granted summary judgment in favor of the Commission against Life Foundation Trust and Wilcher without the need for trial. Among other relief, the Court held Life Foundation Trust and Wilcher jointly liable for disgorgement of the $1,024,418.50 that Life Foundation Trust made in profits on the illegal sale of Hitsgalore stock; (3) ordered Life Foundation Trust to pay a civil penalty of $1,024,418.50; and (4) ordered Wilcher to pay a civil penalty of $110,000. [SEC v. Hitsgalore.com, Inc., Stephen J. Bradford, Life Foundation Trust and Jeanette B. Wilcher, Civil Action No. SACV 01- 1133 GLT (ANx) (C.D. Cal.)] (LR-18024) FINAL JUDGMENTS ENTERED AGAINST TWO FORMER OFFICERS OF ACRODYNE COMMUNICATIONS, INC., AND ACRODYNE'S FORMER CONTROLLER On March 4, 2003, U.S. District Court Judge Michael M. Baylson entered final judgments against A. Robert Mancuso, Ronald R. Lanchoney, and Shamir A. Ally, enjoining them from future violations of the antifraud and recordkeeping provisions set forth in Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1 thereunder, and from future aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The final judgment against Mancuso also enjoined him from future violations of Rule 13b2-2 under the Exchange Act. In addition, the final judgments prohibited Mancuso and Lanchoney from acting as an officer or director of a public company, and imposed civil penalties of $50,000 against Mancuso, $10,000 against Lanchoney, and $10,000 against Ally. The defendants consented to the entry of the orders without admitting or denying the Commission's allegations in the action. The Commission's complaint alleged that the defendants were involved in the dissemination of false financial information by Acrodyne Communications, Inc. (Acrodyne) in press releases and Commission filings in 1998, 1999 and 2000. The Commission alleged that Mancuso (Acrodyne's former CEO and president), Lanchoney (Acrodyne's former CFO), and Ally (Acrodyne's former controller) were aware of numerous and significant problems with Acrodyne's accounting controls, but failed to assure that Acrodyne's financial transactions were accurately recorded. The Commission claimed that, as a result of the actions of Mancuso, Lanchoney and Ally, Acrodyne engaged in inaccurate and improper cost accounting and revenue recognition. The Commission also alleged that, starting in the second quarter of 1999 and continuing through the first quarter of 2000, Ally directed that unsupported journal entries be made to the cost of sales and inventory accounts to bring Acrodyne's financial statements in line with the gross margin percentage he had estimated for period. The Commission claimed that Mancuso approved these fraudulent adjustments for the first quarter of 2000. Finally, the Commission claimed that Mancuso recklessly provided false information to Acrodyne's auditors relating to Acrodyne's guarantee of a customer's debt. In a related matter, on March 6, 2003, the Commission ordered Acrodyne to cease-and-desist from future violations of the antifraud, periodic reporting, and books and records provisions of the Exchange Act. [SEC v. A. Robert Mancuso, Ronald R. Lanchoney, and Shamir A. Ally, Case No. 03-1220, E.D. Pa.] (LR-18025; AAE Rel. 1736) FORMER IMCLONE CEO SAMUEL WAKSAL TO PAY MORE THAN $800,000 IN SEC INSIDER TRADING CASE The Commission today filed additional charges against the former CEO of ImClone Systems Inc., Samuel Waksal, for illegal insider trading and failure to publicly disclose securities transactions. Also today, Waksal consented to a partial resolution of the Commission's claims in which, among other things, Waksal will disgorge over $800,000 in illegal insider trading loss avoidance and profits, including prejudgment interest on those amounts, and be permanently barred from acting as an officer or director of any public company. The Commission originally filed insider trading charges against Waksal on June 12, 2002 in the United States District Court for the Southern District of New York. In its amended complaint, the Commission charges that in late December 2001, Waksal received disappointing news about ImClone, that the United States Food and Drug Administration was expected to soon issue a decision rejecting for review ImClone's pending application to market its cancer treatment, Erbitux. Before this news became public: (1) Waksal tried to sell a substantial amount of his own ImClone stock; (2) Waksal caused his daughter Aliza Waksal to sell all of her ImClone stock; (3) Waksal purchased ImClone put option contracts; and (4) Waksal told this negative information to a family member who sold ImClone stock. The Commission's amended complaint alleges that based on this conduct, Waksal violated Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 16a-3 thereunder. Specifically, the Commission's complaint alleges as follows: * On the evening of December 26, 2001, Waksal learned that on December 28, 2001, the FDA was expected to issue a Refusal to File (RTF) letter to ImClone rejecting consideration of its Biologics Licensing Application for Erbitux. * Also starting that evening, December 26, and through December 28, Waksal himself tried to sell 79,797 shares of ImClone stock worth nearly $5 million. He was unable to do so only because two different broker-dealers would not execute his orders. * Before the market opened the next morning, December 27, Waksal called his daughter Aliza and directed her to sell all of her ImClone stock. Waksal was Aliza's sole means of support and controlled her bank and brokerage accounts. * On December 28, Waksal purchased 210 ImClone put option contracts through a Swiss brokerage account. * On the evening of December 26, Waksal called a family member to alert that relative that ImClone would be receiving this bad news. * As soon as the market opened the next morning, December 27, this family member sold almost $7 million of ImClone stock. This family member continued to sell ImClone stock on December 28 and also sold ImClone stock in the account of a second family member. In total this family member sold more than $8 million of ImClone stock over the next two days. * As expected, the FDA faxed ImClone the RTF letter at about 4 p.m. on December 28, 2001. At 6 p.m. that day, ImClone publicly announced the FDA decision. By the close of trading on December 31, the next trading day, ImClone's stock price had dropped 16%, from $55.25 to $46.46. * By selling before the announcement that ImClone had received an RTF letter from the FDA, Waksal illegally avoided trading losses and received illegal options trading profits. * Waksal failed to file the required documents disclosing his purchase of ImClone put option contracts on December 28. Waksal has agreed to a partial resolution, subject to the Court's approval, of certain of the charges in the amended complaint. Without admitting or denying the allegations, Waksal has consented to the entry of a partial final judgment in the Commission's action for his own attempted sale of ImClone stock in late December 2001, his options transactions on December 28, 2001, and the sale of ImClone stock in Aliza's brokerage account. Waksal has consented to: (a) a permanent injunction from future violations of 17(a) of the Securities Act and Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 16a-3; (b) disgorge $804,367 representing the losses avoided by the sales of ImClone stock in Aliza's account, plus prejudgment interest and Waksal's profits from the options transactions he engaged in on December 28, 2001, plus prejudgment interest; and (c) an officer and director bar. If the Court approves the proposed partial final judgment, resolution of the remaining issues in the case -- specifically, the issues related to Waksal's family member's sale of ImClone stock on December 27 and 28, 2001 and civil penalties concerning the totality of the Commission's allegations against Waksal -- will be stayed until entry of judgment with respect to all counts in United States v. Waksal, 02 Crim. 1041 (S.D.N.Y.). The Commission's investigation is ongoing. The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in the investigation of this matter. [SEC v. Samuel Waksal, 02-cv.4407 (NB) SDNY] (LR-18026; (Press Rel. 2003-30) SEC CHARGES MEDICAL DISPOSAL AND OTHERS WITH DEFRAUDING INVESTORS OF $742,000 The Commission announced that it filed a civil injunctive action today in the U.S. District Court for the District of Connecticut against Global Telecom Services, L.L.C. d/b/a Medical Disposal Devices (Medical Disposal), Albert D. LaTouche (LaTouche) and Salvatore J. Cartelli, Jr. (Cartelli). In its complaint, the Commission charged the following Defendants: * Medical Disposal, a Connecticut company operated by LaTouche and Cartelli. * LaTouche, age 66, a resident of Haddam, Connecticut, who was the President of Medical Disposal. * Cartelli, age 52, a resident of Portland, Connecticut, who was a de facto officer of Medical Disposal. The Commission's complaint alleges the following: Between January 1997 and July 2000, Medical Disposal, LaTouche and Cartelli conducted a fraudulent offering of securities, selling investment contracts and notes to at least 47 investors, and defrauding them of at least $742,000. Medical Disposal claimed to manufacture and sell the "Needlyzer," a device which purportedly destroyed hypodermic needles safely. (The Needlyzer's slogan was "Don't get stuck with someone else's problem.") Medical Disposal, however, never successfully commercially manufactured or sold the Needlyzer. Additionally, Medical Disposal, LaTouche and Cartelli made numerous false and misleading statements to induce investors to purchase investment contracts and notes. For example, the Defendants told investors that the United States Food and Drug Administration (FDA) approved the Needlyzer, when, in fact, the FDA had not. The Defendants told investors that a company in New York manufactured the Needlyzer for Medical Disposal, when, in fact, no company was manufacturing the Needlyzer for Medical Disposal. The Defendants told investors that Medical Disposal had negotiated contracts with foreign companies to purchase the Needlyzer, when, in fact, no such contracts existed. The Defendants also told investors they would use their funds to manufacture Needlyzers, when, in fact, LaTouche and Cartelli used investors' funds for personal purposes and to operate Medical Disposal's other purported business, selling "900" telephone numbers. The Commission charged Medical Disposal, LaTouche and Cartelli with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Commission is seeking permanent injunctions, disgorgement plus prejudgment interest, and civil penalties from all the Defendants. The Commission is also seeking officer and director bars against LaTouche and Cartelli. [SEC v. Global Telecom Services L.L.C. d/b/a Medical Disposal Devices, Albert D. LaTouche and Salvatore J. Cartelli, Jr., 3:03-CV-418, PCD, D.Conn.] (LR-18027) SEC FILES FRAUD ACTION AGAINST NORTH AMERICAN MEDICAL PRODUCTS, INC., ITS PRESIDENT, AND BOILER-ROOM OPERATORS Company, President, and Director Settle for Fraud Injunctions, Industry Bars, Disgorgement and Other Sanctions The Commission filed a civil injunctive action today against North American Medical Products Inc., a corporation operating in Albany, N.Y., that sells needle stick protection devices and other medical products, its President and individuals who sold NAMP stock to the public. The complaint, filed in the U.S. District Court for the Central District of California, alleges that, from 1997 through the fall of 2001, NAMP engaged in the fraudulent sale of its unregistered stock through unregistered brokers in boiler-rooms operated in Orange County, Calif. NAMP President Arthur Gianakos of Albany; former NAMP director Niko G. Efstathiou, and boiler-room operators Paul Mason (a/k/a Louis Ronnie Sarpy), Laurence Mark Anderson (a/k/a Ron Laurence), and Kristin Luck Emery, all of Southern California, were also named as defendants. The defendants are alleged to have made material misrepresentations and omissions to potential investors in sales materials or telephone solicitations. Some of the fraudulent statements include: * that NAMP's profit margin was 30%; * that the company "should write $50-100 million dollars in sales" in 2001, while not disclosing that its highest annual gross revenue at that time was less than $200,000; * that an "angel" investor had invested $15 million in the company; * that NAMP had applied with NASDAQ for pre-approval of the listing of its stock on the NASDAQ stock exchange; * that company received a $1 million order from New York officials the day after the Sept. 11, 2001 terrorist attacks; and * failure to disclose that the company was paying a 50% commission to unregistered brokers from investor subscriptions to NAMP offerings. The complaint alleges that all the defendants violated the anti-fraud and registration provisions of the securities laws. Further, defendants Efstathiou, Mason, Laurence and Emery are alleged to have violated the broker/dealer registrations provisions, and Gianakos to have aided and abetted their violations of that provision; NAMP, Gianakos, and Efstathiou have agreed to settle the Commission's action against them by consenting to the entry of an order of the U.S. District Court enjoining them from violating each of the provisions they are alleged to have violated. Gianakos also agreed, as a condition of settlement, to forgive a loan he made to NAMP in the amount of $354,637 including accrued interest, and consented to be subject to an officer and director bar and a penny stock bar. Efstathiou further consented to be subject to an officer and director bar, and a broker-dealer bar based on the entry of the injunction, and to return 1,050,000 shares of stock to NAMP he received in connection with the stock offering in which he participated. NAMP further agreed to disgorge $120,000, representing all of the proceeds of its stock sales remaining in its possession. No further monetary relief was required of Gianakos or Efstathiou based on their sworn financial statements. [SEC v. North American Medical Products, Inc., Arthur Gianakos, Paul Wayne Mason (a/k/a Louis Ronnie Sarpy), Laurence Mark Anderson (a/k/a Ron Laurence), Kristen Luck Emery, and Niko G. Efstathiou, Civ. No. 03-250 AHS (Anx)] (LR-18028) SELF-REGULATORY ORGANIZATIONS IMMEDIATE EFFECTIVENESS OF PROPOSED RULE CHANGES A proposed rule change submitted by the Chicago Stock Exchange (SR-CHX- 2003-03) relating to changes to its membership dues and fees schedule has become immediately effective pursuant to 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 March 10. (Rel. 34-47468) A proposed rule change (SR-NASD-2003-31) filed by the National Association of Securities Dealers to extend a pilot program with respect to the amendments to NASD Rule 2520, Margin Requirements for Security Futures Contracts, 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 March 10. (Rel. 34- 47470) PROPOSED RULE CHANGE The American Stock Exchange filed a proposed rule change (SR-Amex-2002- 104) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to Amex Rules 26, 29, 171, and 950 to revise specialist capital requirements and the method for computing specialist capital requirements and to create an early warning level with respect to specialist capital. Publication of the proposal is expected in the Federal Register during the week of March 10. (Rel. 34-47469) SECURITIES ACT REGISTRATIONS The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue. Registration statements may be obtained in person or by writing to the Commission's Public Reference Branch at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the following e-mail box address: . In most cases, this information is also available on the Commission's website: . S-8 SPRINT CORP, 2330 SHAWNEE MISSION PKWY, WESTWOOD, KS, 66205, 9136243000 - 16,000,000 ($126,640,000.00) Equity, (File 333-103691 - Mar. 10) (BR. 37) S-3 US ENERGY CORP, 877 NORTH 8TH WEST, GLEN L LARSEN BLDG, RIVERTON, WY, 82501, 3078569271 - 882,460 ($2,729,250.51) Other, (File 333-103692 - Mar. 10) (BR. 04) S-8 NETSALON CORP, 2235 1ST STREET, NO. 216, FT MEYERS, FL, 33901, 941-791-3300 - 1,500,000 ($150,000.00) Equity, (File 333-103693 - Mar. 10) (BR. 09) N-2 NUVEEN PREFERRED CONVERTIBLE INCOME FUND, 0 ($1,000,000.00) Equity, (File 333-103694 - Mar. 10) (BR. 18) S-8 TERENCENET INC, 500 N RAINBOW BLVD ST 300, LAS VEGAS, NV, 89107, 225,000 ($18,000.00) Equity, (File 333-103696 - Mar. 10) (BR. 03) S-8 ABITIBI CONSOLIDATED INC, 800 RENE LEVESQUE BLVD WEST, SUITE 1800, MONTREAL QUEBEC, E6, 00000, 5148752160 - 18,969,172 ($155,681,639.20) Equity, (File 333-103697 - Mar. 10) (BR. 04) S-3 STRUCTURED PRODUCTS CORP, 390 GREENWICH ST, NEW YORK, NY, 10013, 2127836645 - 1 ($1.00) Asset-Backed Securities, (File 333-103698 - Mar. 10) (BR. 05) S-8 U S WIRELESS DATA INC, 750 LEXINGTON AVENUE, NEW YORK, NY, 10022, 2127507766 - 4,384,886 ($1,424,024.76) Other, (File 333-103700 - Mar. 10) (BR. 03) S-8 ACE LTD, ACE BLDG, 30 WOODBOURNE AVE, HAMILTON HM 08 BERMU, D0, 00000, 8092955200 - 3,000,000 ($81,030,000.00) Equity, (File 333-103701 - Mar. 10) (BR. 01) S-8 GLOBAL GOLF HOLDINGS INC /DE/, 8893 BROOKE, ROAD, DELTA, A1, V4C 4G5, 6045832036 - 1,250,000 ($125,000.00) Equity, (File 333-103702 - Mar. 10) (BR. 08) S-8 NUTEK INC, 6330 MCLEOD DRIVE, SUITE 1, LAS VEGAS, NV, 89120, 7022622061 - 1,458,333 ($87,499.98) Equity, (File 333-103703 - Mar. 10) (BR. 09) S-4 AON CORP, 123 N WACKER DR, CHICAGO, IL, 60606, 3127013000 - 0 ($225,000,000.00) Other, (File 333-103704 - Mar. 10) (BR. 01) S-8 ITEC ENVIRONMENTAL GROUP INC, 132 S THIRD AVE, OAKDALE, CA, 95361, 2098483900 - 20,000,000 ($1,200,000.00) Equity, (File 333-103705 - Mar. 10) (BR. 09) S-8 PACCAR INC, 777 106TH AVE NE, PO BOX 1518, BELLEVUE, WA, 98004, 4254557383 - 0 ($210,915,000.00) Equity, (File 333-103706 - Mar. 10) (BR. 05) S-8 FIRST NATIONAL CORP /SC/, 950 JOHN C CALHOUN DR S.E., ORANGEBURG, SC, 29115, 8035342175 - 2,000 ($47,700.00) Equity, (File 333-103707 - Mar. 10) (BR. 07) S-8 FIRST NATIONAL CORP /SC/, 950 JOHN C CALHOUN DR S.E., ORANGEBURG, SC, 29115, 8035342175 - 150,000 ($3,577,500.00) Equity, (File 333-103708 - Mar. 10) (BR. 07) S-3 VOLKSWAGEN PUBLIC AUTO LOAN SECURITIZATION LLC, 0 ($1,000,000.00) Equity, (File 333-103709 - Mar. 10) (BR. ) S-3 SUNOCO LOGISTICS PARTNERS LP, SUN COMPANY INC, TEN PENN CENTER, 1801 MARKET ST C/O JOHN DIROCCO, PHILADELPHIA, PA, 19103, (215)977-3000 - 0 ($500,000,000.00) Unallocated (Universal) Shelf, (File 333-103710 - Mar. 10) (BR. 04) S-3 WELLS FARGO & CO/MN, 420 MONTGOMERY ST, SAN FRANCISCO, CA, 94163, 6126671234 - 0 ($15,260,549,000.00) Other, (File 333-103711 - Mar. 10) (BR. 07) SB-2 PINNACLE FUND I INC, 1702 E. 5600 S., OGDEN, UT, 84403, 8014794179 - 20,000 ($20,000,000.00) Non-Convertible Debt, (File 333-103712 - Mar. 10) (BR. ) S-8 ENERGYSOUTH INC, 2828 DAUPHIA ST., MOBILE, AL, 36606, 3344762720 - 0 ($9,110,500.00) Equity, (File 333-103713 - Mar. 10) (BR. 04) S-8 GREAT LAKES CHEMICAL CORP, 500 EAST 96TH STREET, SUITE 500, INDIANAPOLIS, IN, 46240, 3177153000 - 700,000 ($14,577,500.00) Equity, (File 333-103715 - Mar. 10) (BR. 02) S-8 BIOANALYTICAL SYSTEMS INC, 2701 KENT AVE, WEST LAFAYETT, IN, 47906-1382, 3174634527 - 25,000 ($74,750.00) Equity, (File 333-103716 - Mar. 10) (BR. 01) RECENT 8K FILINGS Form 8-K is used by companies to file current reports on the following events: Item 1. Changes in Control of Registrant. Item 2. Acquisition or Disposition of Assets. Item 3. Bankruptcy or Receivership. Item 4. Changes in Registrant's Certifying Accountant. Item 5. Other Materially Important Events. Item 6. Resignations of Registrant's Directors. Item 7. Financial Statements and Exhibits. Item 8. Change in Fiscal Year. Item 9. Regulation FD Disclosure. The following companies have filed 8-K reports for the date indicated and/or amendments to 8-K reports previously filed, responding to the item(s) of the form specified. 8-K reports may be obtained in person or by writing to the Commission's Public Reference Branch at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the following e-mail box address: . In most cases, this information is also available on the Commission's website: . STATE 8K ITEM NO. NAME OF ISSUER CODE 1 2 3 4 5 6 7 8 9 DATE COMMENT ------------------------------------------------------------------------------------ 3COM CORP DE X X 03/07/03 3DO CO DE X X 02/21/03 A CONSULTING TEAM INC NY X X 02/19/03 ABATIX CORP DE X 03/06/03 ABN AMRO MORTGAGE CORP SERIES 2002-9 DE X X 02/01/03 ABN AMRO MORTGAGE CORP SERIES 2002-9 DE X X 03/01/03 ADEPT TECHNOLOGY INC DE X X 03/03/03 ADVANCE AUTO PARTS INC DE X X 03/07/03 ADVANCE STORES CO INC VA X X 03/07/03 ADVANCED BIOTHERAPY INC NV X X 03/10/03 AEI REAL ESTATE FUND XV LTD PARTNERSH DE X 03/03/03 AGL RESOURCES INC GA X X 03/05/03 ALABAMA POWER CO AL X 03/10/03 ALLEGHENY ENERGY INC MD X X 03/10/03 ALLETE INC MN X 03/07/03 ALPHACOM CORP DE X X 03/07/03 AMERICAN HEALTHWAYS INC DE X 03/07/03 AMERIQUEST MORTGAGE SEC INC ASST BACK DE X X 02/14/03 AMERIQUEST MORTGAGE SEC INC ASST BACK DE X X 02/14/03 AMETEK INC/ DE X X 03/07/03 APPLIED DIGITAL SOLUTIONS INC MO X 03/07/03 APPLIED DIGITAL SOLUTIONS INC MO X X 03/10/03 ARRIS GROUP INC DE X 03/10/03 ARTS WAY MANUFACTURING CO INC DE X 03/10/03 ASPENBIO INC CO X X 03/07/03 ASSET BACKED SECURITIES CORP DE X 03/10/03 ASSISTED LIVING CONCEPTS INC NV X X 02/28/03 AT&T WIRELESS SERVICES INC DE X X 03/05/03 ATLANTIC TECHNOLOGY VENTURES INC DE X X 02/21/03 BANK OF AMERICA MORTGAGE SEC INC MOR DE X X 06/26/02 BAUER PARTNERSHIP INC NV X X 12/05/02 BEAR STEARNS ASSET BACKED SECURITIES DE X X 03/07/03 BEAR STEARNS ASSET BACKED SECURITIES DE X 03/10/03 BETA OIL & GAS INC NV X X 03/05/03 BOISE CASCADE CORP DE X X 03/10/03 BURLINGTON INDUSTRIES INC /DE/ DE X 03/10/03 CAPITAL ONE MASTER TRUST NY X X 03/07/03 CAPITAL ONE MULTI ASSET EXECUTION TRU DE X X 03/07/03 CBRL GROUP INC TN X X 03/10/03 CHALONE WINE GROUP LTD CA X X 03/10/03 CIRCUIT CITY STORES INC VA X 02/28/03 CITA BIOMEDICAL INC CO X X 03/10/03 CMGI INC DE X X 03/07/03 COLONIAL BANCGROUP INC DE X 03/07/03 CONNETICS CORP DE X 03/07/03 COVEST BANCSHARES INC DE X X 03/07/03 CREDIT SUISSE FIRST BOSTON MORT PASS X X 04/25/02 AMEND CREDIT SUISSE FIRST BOSTON MORT PASS X X 04/25/02 AMEND CREDIT SUISSE FIRST BOSTON MORT PASS X X 04/25/02 AMEND CREDIT SUISSE FIRST BOSTON MORT PASS X X 04/25/02 AMEND CREDIT SUISSE FIRST BOSTON MORT PASS X X 04/25/02 AMEND CSFB MORTGAGE PASS THROUGH CERTIFICAT DE X X 03/25/02 AMEND CSFB MORTGAGE PASS THROUGH CERTIFICAT DE X X 03/25/02 AMEND CSFB MORTGAGE PASS THROUGH CERTIFICAT DE X X 03/25/02 AMEND CSFB MORTGAGE PASS THROUGH CERTIFICAT DE X X 03/25/02 AMEND CSFB MORTGAGE PASS THROUGH CERTIFICAT DE X X 03/25/02 AMEND CSFB MORTGAGE PASS THROUGH CERTIFICAT DE X X 03/25/02 AMEND CSFB MORTGAGE PASS THROUGH CERTIFICAT DE X X 03/25/02 AMEND CSX TRADE RECEIVABLES CORP DE X 02/25/03 CWMBS INC DE X X 01/30/03 DAVE & BUSTERS INC MO X X 03/04/03 DELTA AIR LINES INC /DE/ DE X X 03/10/03 DIAL THRU INTERNATIONAL CORP DE X 03/06/03 DOBSON COMMUNICATIONS CORP OK X X 03/05/03 AMEND DRS TECHNOLOGIES INC DE X 03/10/03 ECC INTERNATIONAL CORP DE X X 03/06/03 ENERGY WEST INC MT X X 03/10/03 ENRON CORP/OR/ OR X X 03/10/03 ESG RE LTD X X 03/02/03 EXXON MOBIL CORP NJ X 03/10/03 FARMER MAC MORTGAGE SECURITIES CORP DE X X 03/10/03 FEDERATED DEPARTMENT STORES INC /DE/ DE X 03/10/03 FIRST SECURITY BANCORP INC /KY/ KY X 03/02/03 FRANKLIN FINANCIAL SERVICES CORP /PA/ PA X X 03/06/03 GAMETECH INTERNATIONAL INC DE X X 03/07/03 GART SPORTS CO DE X X 03/06/03 GEORGIA POWER CO GA X 03/10/03 GISH BIOMEDICAL INC CA X 03/06/03 GLOBAL ENTERTAINMENT HOLDINGS/EQUITIE CO X X 03/07/03 GS MORTGAGE SECURITIES CORP DE X X 03/07/03 GSE SYSTEMS INC DE X 03/10/03 GULF POWER CO ME X 03/10/03 HA LO INDUSTRIES INC IL X X 02/28/03 HANDSPRING INC CA X 02/24/03 HAWAIIAN ELECTRIC INDUSTRIES INC HI X X 03/07/03 HERBST GAMING INC NV X X 02/21/03 HEXCEL CORP /DE/ DE X X 03/10/03 HUTTIG BUILDING PRODUCTS INC DE X X 03/05/03 HYPERTENSION DIAGNOSTICS INC /MN MN X 02/26/03 INDIGINET INC/FL FL X 02/24/03 INDYMAC MBS INC RESIDENTIAL ASSET SEC X X 01/29/02 INTERNATIONAL DISPLAYWORKS INC OR X X 03/04/03 ISCO INTERNATIONAL INC DE X X 03/05/03 JACKSON PRODUCTS INC DE X 03/07/03 JACOBSON STORES INC MI X X 02/28/03 KIK TECHNOLOGY INTERNATIONAL INC CA X X 03/06/03 LA QUINTA CORP DE X 03/10/03 LONDON PACIFIC GROUP LTD X 03/10/03 MANITOWOC CO INC WI X 03/07/03 MEDICIS PHARMACEUTICAL CORP DE X X 03/10/03 MEDTOX SCIENTIFIC INC DE X 03/06/03 MERISTAR HOSPITALITY CORP MD X X 03/10/03 MERISTAR HOSPITALITY OPERATING PARTNE DE X X 03/10/03 MIDWEST BANC HOLDINGS INC DE X X 03/07/03 MISSISSIPPI POWER CO MS X 03/10/03 MODEM MEDIA INC DE X 03/10/03 MONARCH CASINO & RESORT INC NV X 03/10/03 MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 03/10/03 MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 03/10/03 MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 07/25/02 AMEND MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 07/25/02 AMEND MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 07/25/02 AMEND MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 07/25/02 AMEND MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 07/25/02 AMEND MORGAN STANLEY DEAN WITTER CAPITAL I DE X X 07/25/02 AMEND MORTGAGE ASSET SECURITIZATION TRANSAC DE X 03/10/03 NATIONAL CITY CORP DE X 03/10/03 NATIONAL STEEL CORP DE X X 03/10/03 NETBANK INC GA X X 03/10/03 NETWORK COMMERCE INC WA X X 02/28/03 NEWCOURT HOLDINGS INC FL X X 03/06/03 NORTH BANCORP INC MI X X X 03/10/03 ONLINE PROCESSING INC NV X X X X X 02/28/03 PACIFICORP /OR/ OR X 03/07/03 PARKWAY PROPERTIES INC MD X X 03/10/03 PASW INC CA X 02/27/03 PEABODY ENERGY CORP DE X X 03/07/03 PSB BANCORP INC PA X X 03/10/03 PUBLIC SERVICE CO OF COLORADO CO X X 03/07/03 QT 5 INC DE X X 03/10/03 RENAISSANCE HOME EQU LN TR HM EQU LN DE X X 07/26/02 RENAISSANCE HOME EQU LN TR HM EQU LN DE X X 07/26/02 RENAISSANCE HOME EQU LN TR HM EQU LN DE X X 07/26/02 RENAISSANCE HOME EQU LN TR HM EQU LN DE X X 07/26/02 RENAISSANCE HOME EQU LN TR HM EQU LN DE X X 07/26/02 RENAISSANCE HOME EQU LN TR HM EQU LN DE X X 07/26/02 RENAISSANCE MORTGAGE ACCEPTANCE CORP DE X 03/10/03 RENAISSANCE MORTGAGE ACCEPTANCE CORP DE X 03/10/03 RESIDENTIAL ASSET MORT PROD GMACM MOR X X 02/25/02 AMEND SAVANNAH ELECTRIC & POWER CO GA X 03/10/03 SECURITY NATIONAL FINANCIAL CORP UT X X 12/23/02 AMEND SHIRE PHARMACEUTICALS GROUP PLC X X 03/10/03 SLADES FERRY BANCORP MA X X 03/06/03 SOUTHERN CO DE X 03/10/03 SOUTHERN CONNECTICUT BANCORP INC CT X X 02/11/03 SOUTHERN MICHIGAN BANCORP INC MI X 03/10/03 SOUTHERN POWER CO X 03/10/03 SOUTHERN UNION CO DE X X 03/10/03 SPECTRX INC DE X X 03/10/03 SPRINT CORP KS X 03/07/03 SRM NETWORKS INC NV X 03/05/03 STANDARD MANAGEMENT CORP IN X X 09/17/02 AMEND STEALTH MEDIALABS INC NV X 10/30/02 AMEND STOCKERYALE INC MA X X 03/10/03 STRUCTURED OBLIGATIONS CORP DE X 11/15/02 STRUCTURED PRODUCTS CORP DE X 11/15/02 SUMMUS INC USA FL X X 03/10/03 SUSQUEHANNA MEDIA CO DE X X 03/10/03 TELEPHONE & DATA SYSTEMS INC /DE/ DE X X 03/10/03 TELLABS INC DE X 03/10/03 TELOS CORP MD X 02/24/03 TETRA TECH INC DE X X 03/07/03 TETRA TECHNOLOGIES INC DE X X 03/07/03 UNITED AMERICAN HEALTHCARE CORP MI X X 03/03/03 AMEND UNITED STATES CELLULAR CORP DE X X 03/10/03 UNIVERSAL BEVERAGES HOLDINGS CORP FL X 02/05/03 AMEND US AIRWAYS GROUP INC DE X X 03/10/03 VALERO ENERGY CORP/TX DE X X 03/10/03 VALERO L P DE X X 03/07/03 VALERO L P DE X X 03/07/03 VENTURES NATIONAL INC UT X X 03/03/03 VERIZON VIRGINIA INC VA X X 03/10/03 WAMU MORTGAGE PASS THROUGH CERT SER 2 DE X X 03/01/03 WAMU MORTGAGE PASS THROUGH CERT SERIE DE X X 03/01/03 WASHINGTON MUTUAL MSC MORT PAS THR CE DE X X 03/01/03 WASHINGTON MUTUAL MSC MORT PASS THRU DE X X 03/01/03 WASHINGTON MUTUAL MSC MORTGAGE PASS T DE X X 03/01/03 WFS FINANCIAL INC CA X 03/07/03 WHISTLER INVESTMENTS INC /NV/ NV X 11/15/02 WORLDPORT COMMUNICATIONS INC DE X X 03/07/03 X RITE INC MI X 03/10/03 YORK WATER CO PA X 03/10/03