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COMMISSION ANNOUNCEMENTSCCOutreach National Seminar to Help Enhance Compliance Programs for Protection of InvestorsThe Securities and Exchange Commission today announced that chief compliance officers (CCOs) for mutual fund and investment advisers can begin registering for the agency's annual CCOutreach National Seminar to help them further enhance their compliance programs for the protection of investors. The CCOutreach National Seminar will be held on Nov. 13, 2008, at the SEC's Washington, D.C., headquarters and will include panel discussions to highlight some of the compliance issues that are important for mutual funds and investment advisers in today's ever-changing market environment. Such current topics include sound practices with respect to valuation, prevention of insider trading, ensuring best execution, and making disclosures that are understandable and meaningful to investors. "Effective compliance procedures at mutual fund and advisory firms are critical to the protection of nearly 100 million Americans who invest in mutual funds," said Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations. "The CCOutreach program and its National Seminar enable the SEC staff to keep the lines of communication open with CCOs across the country to discuss the latest regulatory and compliance developments and ensure that firms have the necessary safeguards in place to protect investors." Andrew J. Donohue, Director of the SEC's Division of Investment Management, added, "In these challenging times, CCOs play a vital role in overseeing compliance programs, including identifying and managing the risks that mutual funds and investment advisers face in today's complex markets. The CCOutreach Program continues to provide an invaluable tool for CCOs and SEC staff to exchange views as we further our common goal of protecting the nation's investors. I look forward to discussing the important issues facing CCOs and their firms at this year's National Seminar." Registration materials and other information for the CCOutreach National Seminar for adviser and mutual fund CCOs are available on the SEC Web site. The SEC's CCOutreach program is sponsored jointly by the agency's Division of Investment Management and the Office of Compliance Inspections and Examinations. The National Seminar will take place from 9 a.m. to 5 p.m. ET, and attendance is limited to 500 people. Adviser and mutual fund CCOs will be given priority on a first-come, first-served basis. The seminar also will be webcast at www.sec.gov. For additional questions, contact the SEC's Division of Investment Management at (202) 551-6733. CCOs for broker-dealer firms should note that the next SEC/FINRA CCOutreach National Seminar for broker-dealer CCOs will be held in the spring of 2009. (Press Rel. 2008-221) Closed Meeting - Monday, September 29, 2008 - 2:00 p.m.The subject matter of the closed meeting scheduled for Monday, September 29, will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; and other matters relating to enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400. RULES AND RELATED MATTERSCommission Grants Temporary, Conditional Relief from the Net Capital Rule for Barclays Capital, Inc.On September 22, the Commission issued an Order pursuant to Section 15 of the Securities Exchange Act of 1934 and Rule 15c3-1 thereunder to allow Barclays Capital Inc., as successor to substantially all of Lehman's assets, businesses and personnel, to continue to use, for a temporary period, the alternative method of computing net capital contained in Appendix E solely when computing capital charges for the positions it acquires from Lehman, subject to certain representations and conditions specified in the Order. (Rel. 34-58612) ENFORCEMENT PROCEEDINGSIn the Matter of Consol. Growers and Processors, Inc.An Administrative Law Judge has issued an Order Making Findings and Revoking Registrations by Default as to Four Respondents (Default Order) in Consol. Growers and Processors, Inc. The Order Instituting Proceedings alleged that Respondents Consolidated Growers and Processors, Inc., Monsoon International Manufacturing & Distribution, Inc., Pony Express U.S.A., Inc., and Sunflower USA, Ltd., failed repeatedly to file required annual and quarterly reports while their securities were registered with the Securities and Exchange Commission. The Default Order finds these allegations to be true and revokes the registration of each class of registered securities Consolidated Growers and Processors, Inc., Monsoon International Manufacturing & Distribution, Inc., Pony Express U.S.A., Inc., and Sunflower USA, Ltd., have with the Commission, pursuant to Section 12(j) of the Securities Exchange Act of 1934. (Rel. 34-58614; File No. 3-13141) Securities and Exchange Commission Orders Hearing on Registration Revocation Against Six Public Companies for Failure to Make Required Periodic FilingsOn September 22, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of six companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the six issuers are delinquent in their required periodic filings with the Commission. In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-58617; File No. 3-13227) In the Matter of Evan K. AndersenOn September 22, 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 Evan K. Andersen, a partner and principal of Lydia Capital, LLC (Lydia Capital), a registered investment adviser located in Boston, Massachusetts. Between at least June 2006 and April 2007, Andersen acted as an investment adviser to Lydia Capital Alternative Investment Fund LP (the Fund). The Commission's Order included findings that on Sept. 16, 2008, a final judgment was entered by consent against Andersen, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 in a civil action entitled SEC v. Lydia Capital, LLC, et al., Civil Action No. 07-CV-10712-RGS, in the United States District Court for the District of Massachusetts. In addition, the Commission's amended complaint alleged, among other things, that Andersen sold limited partnership interests and retained investors in the Fund through a series of material misrepresentations and omissions, including but not limited to: (1) materially overstating, and in some instances completely fabricating the Fund's performance; (2) inventing business partners, offices, and investors in an attempt to legitimatize the firm and concealing the truth as to why key vendors and banks ceased relationships with the Respondent; (3) making material misstatements and omissions about the significant criminal history of another Lydia Capital partner and principal, and failing to disclose a February 2007 criminal asset freeze in England; (4) making material misstatements and omissions about how the Fund planned to address certain material risks and failing to disclose others; and (5) misstating the nature of the Fund's assets and its investment process. In addition, the Commission's amended complaint alleged that Andersen took approximately $2.35 million of Fund assets to which he was not entitled. In view of these findings, the Commission found it appropriate and in the public interest to impose a bar from association with any investment adviser against Andersen. Andersen consented to the issuance of the Order without admitting or denying any of the findings, except as to the final judgment against him. (Rel. IA-2783; File No. 3-13228) Securities and Exchange Commission Orders Hearing on Registration Revocation Against Five Public Companies for Failure to Make Required Periodic FilingsOn September 22, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of five companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the five issuers are delinquent in their required periodic filings with the Commission. In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-58618; File No. 3-13229) Marc Willis SanctionedMarc Willis, of Chicago, Illinois, has been barred from association with any broker or dealer. The sanction was ordered in an administrative proceeding before an administrative law judge, following his March 2008 conviction for wire fraud. The misconduct that underlay the conviction occurred at John Dawson & Associates, Inc. (JDAI), a broker-dealer, where Willis was employed as Chief Compliance Officer. There, he consented to after-the-fact reallocation of favorable trades from certain JDAI accounts to accounts in the names of his mother and brother as a means of transferring funds to them at the expense of the firm and/or other customers to which the profits should have legitimately been allocated. (Rel. 34-58619; File No. 3-13120) AmSouth Bank to Pay $11 Million to Settle Fraud Charges in Connection With Undisclosed Marketing Arrangements with BISYS Fund ServicesOn September 23, the Commission announced the institution of a settled enforcement action against AmSouth Bank and AmSouth Asset Management (AmSouth), mutual fund investment advisers, finding that they defrauded the AmSouth Funds. AmSouth entered into undisclosed side agreements with BISYS Fund Services (BISYS), the administrator of the AmSouth Funds. In these side agreements, BISYS agreed to rebate approximately $16 million of its total $49 million administration fee paid by the AmSouth Funds to AmSouth, to pay for marketing expenses. As part of its settlement, AmSouth, now part of Regions Bank, agreed to pay a total of $11.4 million, consisting of disgorgement of $7.7 million in ill-gotten gains, prejudgment interest of $2.2 million, and a $1.5 million civil penalty. These monies will be placed in a distribution fund to be distributed to the AmSouth Funds, now part of the Pioneer Group. The Order finds that AmSouth entered into improper and undisclosed side agreements with BISYS, pursuant to which BISYS rebated a portion of its administration fee to AmSouth so that AmSouth would continue to recommend BISYS as an administrator for the AmSouth Funds to the AmSouth Funds' board of trustees. Through these side agreements, AmSouth improperly used a portion of BISYS' administration fee to pay for marketing expenses related to the AmSouth Funds. AmSouth also used money rebated by BISYS to pay expenses entirely unrelated to marketing, including the salary, bonus, benefits, and country club membership of the president of the AmSouth Funds. Distribution expenses paid from these rebated administration fees were related to but not provided for by the AmSouth Funds' 12b-1 plan. In addition to the side agreements, BISYS and AmSouth agreed that in exchange for AmSouth recommending to the trustees that BISYS provide securities lending services to the AmSouth Funds, BISYS would rebate some of the fees it charged the funds for securities lending back to AmSouth in the guise of consulting fees. Under this consulting agreement, AmSouth purportedly provided general marketing advice to BISYS to market AmSouth's own funds and received $1,161,000 in total consulting fees. Neither the existence of side and consulting agreements nor the terms of these agreements were disclosed to the AmSouth Funds' independent trustees or to the Funds' shareholders. In settling the Commission's charges, AmSouth Asset Management agreed to cease and desist from committing or causing any violations and any future violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and AmSouth Bank and AmSouth Asset Management agreed to cease and desist from committing or causing any violations and any future violations of Sections 12(b) and 34(b) of the Investment Company Act of 1940 and Rule 12b-1 thereunder. AmSouth Bank and AmSouth Asset Management consented to the issuance of the Order without admitting or denying any of the findings. (Rels. IA-2784A; IC-28387A; File No. 3-13230) In the Matter of Norman Stumacher, CPAOn September 23, the Commission issued an Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 (Exchange Act) and Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order against Norman Stumacher, CPA (Order). The Order finds that Stumacher engaged in improper professional conduct pursuant to Rule 102(e)(1)(ii) of the Commission's Rules of Practice. The Order further finds that Stumacher willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Video Without Boundaries, Inc. (Video), a consumer electronics company based in Fort Lauderdale, Florida, recorded fictitious revenue and assets at the direction of its sole officer and director through a number of accounting schemes, including improper revenue recognition, in violation of generally accepted accounting principles (GAAP). Stumacher audited Video's 2002 and 2003 annual financial statements and issued audit reports containing unqualified audit opinions, representing that the financial statements were presented in conformity with GAAP and that he conducted his audits in accordance with generally accepted auditing standards (GAAS). These representations were false because Video's financial statements contained numerous departures from GAAP that materially overstated Video's revenues and understated its net losses. Moreover, contrary to Stumacher's audit reports, his audits were not conducted in accordance with GAAS because he utterly failed to comply with professional standards related to field work and general standards in the performance of his audits. Based on the above, the Order requires Stumacher to cease and desist from committing or causing any violations and any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Order further denies Stumacher the privilege of appearing or practicing before the Commission as an accountant. Stumacher consented to the issuance of the Order without admitting or denying any of the findings therein. In a related civil proceeding, Stumacher has offered to consent, without admitting or denying the allegations of the complaint, to the entry of a final judgment against him ordering him to disgorge $25,000, with prejudgment interest of $8,749.11, and to pay a civil penalty in the amount of $20,000. (Rel. 34-58624; AAE Rel. 2883; File No. 3-13231) INVESTMENT COMPANY ACT RELEASESTrust for Professional Managers, et al.A notice has been issued giving interested persons until October 14, 2008 to request a hearing on an application filed by Trust for Professional Managers, et al., for an order exempting applicants from Section 15(a) of the Investment Company Act and Rule 18f-2 under the Act. The order would permit the applicants to enter into and materially amend subadvisory agreements without shareholder approval and would grant relief from certain disclosure requirements. (Rel. IC-28382 - September 19) Triangle Capital Corporation, et al.A notice has been issued giving interested persons until Oct. 10, 2008, to request a hearing on an application filed by Triangle Capital Corporation (Triangle), et al. for an order under Sections 6(c), 12(d)(1)(J), and 57(c) of the Investment Company Act granting exemptions from Sections 12(d)(1)(A) and (C), 18(a), 21(b), 57(a)(1) - (a)(3), and 61(a) of the Act; under Section 57(i) of the Act and Rule 17d-1 under the Act to permit certain joint transactions otherwise prohibited by Section 57(a)(4) of the Act; and under Section 12(h) of the Securities Exchange Act of 1934 (Exchange Act) granting an exemption from Section 13(a) of the Exchange Act. The order would permit Triangle and its wholly-owned small business investment company (SBIC) subsidiary to (1) engage in certain transactions that otherwise would be permitted if Triangle and its SBIC subsidiary were one company, (2) adhere to a modified asset coverage requirement, and (3) file certain reports on a consolidated basis. (Rel. IC-28383 - September 19) Allianz Life Insurance Company of North America, et al.An order has been issued approving an application filed by Allianz Life Insurance Company of North America, Allianz Life Variable Account A, Allianz Life Variable Account B, Allianz Life Insurance Company of New York, and Allianz Life of NY Variable Account C (collectively, Applicants), and Allianz Variable Insurance Products Trust (collectively with Applicants, Section 17 Applicants). Applicants have been authorized under Section 26(c) of the Investment Company 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 Act in order to engage in certain in-kind transactions in connection with the substitution. (Rel. IC-28384 -September 19) Aberdeen Asset Management Inc. and Aberdeen FundsAn order has been issued on an application filed by Aberdeen Asset Management Inc. and Aberdeen Funds exempting them from Section 15(a) of the Investment Company Act and Rule 18f-2 under the Act. The order permits the applicants to enter into and materially amend subadvisory agreements without shareholder approval and grants relief from certain disclosure requirements. (Rel. IC-28385 - September 22) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2008/dig092308.htm
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