SEC NEWS DIGEST Issue 2002-33 February 19, 2002 ENFORCEMENT PROCEEDINGS COMMISSION DECLARES DECISION AS TO TOKS INC. FINAL The initial decision of an administrative law judge suspending the effectiveness of a registration statement filed by Toks Inc. has become final. The law judge found that the registration statement contained many material misstatements and omissions. Among other things, the registration statement omitted required audited financial statements, and falsely identified Toks as a Delaware corporation. In fact, the State of Delaware had repealed Toks' corporate charter for failure to pay taxes. (Rel. 33-8065; File No. 3-10635) COMMISSION DECLARES DECISION AS TO ROBERT MCCOOK FINAL The initial decision of an administrative law judge dismissing proceedings against Robert L. McCook has become final. During the relevant period, McCook was associated with Crestar Securities Corporation, a registered broker-dealer. The law judge found that McCook was not aware that he was participating in the net capital or books and recordkeeping violations of another firm, First Montauk Securities Corporation. (Rels. 33-8066; 34-45450; File No. 3-9440) COMMISSION INSTITUTES ADMINISTRATIVE PROCEEDINGS AGAINST CRAIG WIGINTON AND ROBERT JONES The Commission instituted separate public administrative proceedings against Craig Wiginton (Wiginton) and Robert Shane Jones (Jones) pursuant to Section 15(b) of the Securities Exchange Act of 1934. Simultaneous with the institution of the proceedings, Wiginton and Jones each submitted separate Offers of Settlement. In their Offers of Settlement Wiginton and Jones each consented to the entry of separate Orders barring them from association with any broker or dealer, with a right to reapply after three years. The Orders were based upon the prior entry in a civil action of separate permanent injunctions against Wiginton and Jones. The Commission's complaint in the civil action had alleged that Wiginton and Jones each violated the antifraud provisions of the securities laws, by among other things, making false oral representations to customers in connection with the offer and sale of foreign currency options by Currency Trading International, Inc., a company based in Newport Beach, California. (Administrative Proceeding In the Matter of Craig Wiginton - Rel. 34-45445, File No. 3-10700; Administrative Proceeding In the Matter of Robert Shane Jones - Rel. 34- 45446, File No. 3-10701) SEC INSTITUTES PROCEEDINGS AGAINST 13 FORMER L.C. WEGARD & CO. BROKERS On, February 15, Commission issued an Order Instituting Proceedings against John Adams, Jr. of Pittsburgh, PA; Ronald Bongo of Glen Ridge, NJ; Samuel Del Presto, of Jupiter, FL; Sean Hart of Point Pleasant, NJ; Curtis Marchand, III of Mission, KS; Michael McDermott of Clarksburg, NJ; Palmer Myers of Hillsborough, NJ; David Nelson of Olathe, KS; Daniel Petronelli of West Bridgewater, MA; Gary Smolokoff of West Long Branch, NJ; Malik Tawil of Orlando, FL; Lawrence Weil of Hamilton Square, NJ; and Neil White of Atlantic Highlands, NJ, the respondents. Each of the respondents previously was convicted of conspiracy to commit securities fraud in actions brought by the Office of the U.S. Attorney for the District of New Jersey. In the criminal actions, the respondents were charged with fraudulent conduct toward investors while employed as stockbrokers in various supervisory positions at L.C. Wegard & Co., Inc., a broker/dealer whose registration with the Commission was later revoked. A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondents an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest. (Rel. 34-45455; File No. 3-10702) SEC CHARGES FORMER BANK VICE PRESIDENT, HIS FATHER, AND 5 OTHERS WITH INSIDER TRADING Today, the Securities and Exchange Commission filed a complaint in the United States District Court for the District of New Jersey against John S. Kramer, W. Jeffrey Kramer, Richard K. Pulling, Jr., and Keith E.C. Pulling, for insider trading. Named also in the complaint as relief defendants are John Kramer's wife Nancy Kramer, his daughter Elizabeth Kramer Whitney, his client Lucien D. Yokana, and two family partnerships he controlled, Northeast Investment Properties (Northeast Investment) and Vermont Capital Investors (Vermont Capital). Jeffrey Kramer, Richard Pulling, Keith Pulling, and Yokana have agreed to settlements with the Commission. The complaint alleges that on two separate occasions in 2000, Jeffrey Kramer obtained material nonpublic information while working in the trust division of a national bank located in Hartford, Connecticut, and misused that information to earn illegal profits trading stock. The complaint further alleges that in each instance, he also tipped his father John Kramer and his friend Richard Pulling, and Richard Pulling then tipped his brother Keith Pulling. Both times, John Kramer, Richard Pulling, and Keith Pulling made improper use of the nonpublic or "inside" information to obtain illegal trading profits. The complaint alleges that collectively, the defendants made approximately $620,000 in illegal trading profits. The complaint alleges that no later than June 14, 2000, Jeffrey Kramer learned that a customer of the bank he worked for was forming a trust for the purpose of acquiring Justin Industries, Inc. (Justin). Between June 14 and June 19, 2000, Jeffrey Kramer, John Kramer, Richard Pulling. and Keith Pulling purchased 40,750 shares of Justin stock. On June 20, 2000, Justin announced that it had agreed to a cash tender offer made by another company, and the price of Justin stock rose in response to the announcement. Following the June 20, 2000 announcement, the defendants sold the Justin stock they had purchased for total illicit profits of $185,650. The complaint further alleges that by August 7, 2000, Jeffrey Kramer learned that the same customer was forming another trust for the purpose of acquiring Republic Group, Inc. (Republic). Between August 8 and August 11, 2000, Jeffrey Kramer, John Kramer, Richard Pulling and Keith Pulling purchased 172,900 shares of Republic stock. On August 11, 2000, Republic announced that it had entered into a merger agreement with the trust. Again, the announcement caused a substantial increase in the price of Republic stock. The defendants then sold the Republic stock they had purchased for total illicit profits of $434,181. The Commission alleges that as a result of the conduct described above, John Kramer, Jeffrey Kramer, Richard Pulling and Keith Pulling violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 14e-3 thereunder. The Commission is seeking permanent injunctions, disgorgement of the illegal trading profits, prejudgment interest, and civil penalties against them. The Commission also alleges that Nancy Kramer, Elizabeth Kramer Whitney, Yokana, Northeast Investment, and Vermont Capital all received illegal profits because John Kramer bought Republic and Justin stock for them. The Commission is not charging them with fraud, but is seeking disgorgement of the ill-gotten gains they received due to John Kramer's alleged illegal trading. John Kramer, age 71 and Nancy Kramer, age 71, live in Skillman, New Jersey and in Greensboro, Vermont; Jeffrey Kramer, age 45, lives in Glastonbury, Connecticut; Richard Pulling, age 45, lives in Skillman, New Jersey; Keith Pulling, age 42, lives in Oak Ridge, North Carolina; Elizabeth Kramer Whitney, age 40, lives in Locust Valley, New York; and Yokana, age 75, lives in Princeton, New Jersey. Without admitting or denying the facts alleged in the complaint, Jeffrey Kramer, Richard Pulling, Keith Pulling, and Yokana have agreed to settlements under which they will pay a total of $479,902. The settlements filed with the court for approval provide that: (1) Jeffrey Kramer, Richard Pulling, and Keith Pulling consent to entry of final judgments permanently enjoining them from future violations of Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder; (2) Jeffrey Kramer will pay $103,212.00 in disgorgement, $11,656.00 in prejudgment interest, and $154,818.00 in penalties; (3) Richard Pulling will pay $52,387 in disgorgement, $5,938 in prejudgment interest, and $52,387 in penalties; (4) Keith Pulling will pay $30,450 in disgorgement, $3,505 in prejudgment interest, and $30,450 in penalties; and (5) Yokana will pay $32,450 in disgorgement, and $2,649 in prejudgment interest. The litigation is on-going against John Kramer, Nancy Kramer, Elizabeth Kramer Whitney, Northeast Investment, and Vermont Capital. [SEC v. John S. Kramer, W. Jeffrey Kramer, Richard K. Pulling, Jr., and Keith E.C. Pulling (Defendants), and Nancy Kramer, Elizabeth Kramer Whitney, Lucien D. Yokana, Northeast Investment Properties, and Vermont Capital Investors (Relief Defendants), Civil-2-690 (MLC) (D. N.J.)] (LR- 17364) SELF-REGULATORY ORGANIZATIONS PROPOSED RULE CHANGE A proposed rule change has been filed by the American Stock Exchange (SR- AMEX-2001-47) relating to proposed rules regarding issuer listing standards and procedures. Publication of the proposal is expected in the Federal Register during the week of February 18. (Rel. 34-45451) APPROVAL OF PROPOSED RULE CHANGE The Commission granted approval to a proposed rule change submitted by the New York Stock Exchange (SR-NYSE-2001-49) amending NYSE Rule 902, Off-Hours Trading Orders, to permit the submission of member to member coupled orders in Crossing Session I in order to close out error positions. Publication of the approval is expected in the Federal Register during the week of February 18. (Rel. 34-45452) ACCELERATED APPROVAL OF PROPOSED RULE CHANGE The Commission approved on an accelerated basis a proposed rule change and Amendment No. 1 thereto submitted by Philadelphia Stock Exchange relating to the volume thresholds for the options specialist shortfall fee and corresponding shortfall credit (SR-Phlx-2001-115). (Rel. 34- 45442) DELISTINGS GRANTED An order has been issued granting the application of the Pacific Stock Exchange to strike from listing and registration the Common Stock, no par value, of Kushner-Locke Company, effective at the opening of business on February 15, 2002. (Rel. 34-45447) An order has been issued granting the application of the Boston Stock Exchange to strike from listing and registration the Common Stock, $.001 par value, of The Netplex Group, Inc., effective at the opening of business on February 15, 2002. (Rel. 34-45448) An order has been issued granting the application of the Boston Stock Exchange to strike from listing and registration the Common Stock, $.01 par value, and Common Stock Purchase Warrants of The Widecom Group, Inc., effective at the opening of business on February 19, 2002. (Rel. 34-45453)