SEC News Digest

ENFORCEMENT PROCEEDINGS

In the Matter of Cort L. Poyner

An Administrative Law Judge has issued an Order Making Findings and Imposing Sanction by Default (Default Order) in Administrative Proceeding No. 3-13299, Cort L. Poyner. The Order Instituting Proceedings alleged that, on Nov. 3, 2008, the U.S. District Court for the Northern District of California entered a final judgment against Poyner, permanently enjoining him from future violations of Sections 5 and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rule 10b-5.

The Default Order finds the allegations to be true. It concludes that, pursuant to Section 15(b)(6) of the Exchange Act, it is in the public interest to bar Poyner from association with any broker or dealer. (Rel. 34-59707; File No. 3-13299)

In the Matter of Michael W. Crow and Robert David Fuchs

The United States Securities and Exchange Commission announced the issuance of an Order Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940 as to Respondent Robert David Fuchs (Order). The Order finds that Fuchs, through his wholly-owned entity, was the sole owner of Duncan Capital LLC (Duncan Capital), which was, at all relevant times, a broker-dealer registered with the Commission pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act) and was a member of the National Association of Securities Dealers. Fuchs was also Duncan Capital's nominal president, compliance officer and registered financial and operations principal. Fuchs also was associated with an unregistered investment adviser through which he managed a hedge fund.

On May 15, 2007, the Commission filed a civil action against Michael Crow, Fuchs, Duncan Capital, Duncan Capital Group LLC (Duncan Capital Group), and others, in the United States District Court for the Southern District of New York. See Securities and Exchange Commission v. Michael W. Crow, et al., Civil Action Number 07 Civ. 3814 (CM). On Aug. 17, 2007, the Commission filed an Amended Complaint alleging, among other things, that Crow unlawfully acted as an unregistered principal of Duncan Capital, with Fuchs' knowledge and substantial assistance. The Complaint further alleged that Duncan Capital's regulatory filings, signed by Fuchs, falsely omitted to state both Crow's control of the firm and his prior regulatory history. Fuchs, the owner and nominal president of Duncan Capital, not only acquiesced in Crow's undisclosed control of the firm, but also facilitated it by, among other things, transferring Duncan Capital's profits to entities Crow controlled. Duncan Capital, with the knowledge and substantial assistance of Crow and Fuchs, also failed to register both Crow and another individual, who was the firm's senior managing director. Also, with Crow's and Fuchs' knowledge and substantial assistance, Duncan Capital Group acted an as unregistered broker. On Nov. 5, 2008, following a bench trial, the Honorable Colleen McMahon found that Fuchs aided and abetted violations of Sections 15(a), 15(b)(1), 15(b)(7) and 17(a) of the Exchange Act and Rules 15b3-1, 15b7-1 and 17a-3(a)(12) thereunder. On Nov. 13, 2008, the district court entered the Final Judgment as to Fuchs and others, among other things, permanently enjoining Fuchs from aiding and abetting violations of Sections 15(a), 15(b)(1), 15(b)(7) and 17(a) of the Exchange Act and Rules 15b3-1, 15b7-1 and 17a-3(a)(12) thereunder.

Based on the above, the Order bars Fuchs from association with any broker, dealer, or investment adviser. Fuchs consented to the issuance of the Order, without admitting or denying the findings therein except as to jurisdiction and as to the Court's final judgment against him. (Rel. 34-59711; IA-2863; File No. 3-13309)

SEC Halts $67 Million Dollar Real Estate Investment Scheme in Arizona

The Securities and Exchange Commission today announced that it has obtained a temporary restraining order, asset freeze, and other emergency relief against a former Arizona certified public accountant for targeting his accounting clients in a multi-million dollar real estate investment scheme.

The Commission's complaint names Dan Wise, age 52, of Scottsdale, Arizona, and his four companies Whispering Winds Properties, LLC, LM Beagle Properties, LLC, Karlena, Inc., and Axis International, Inc. The complaint alleges Wise solicited his tax and accounting clients, and their friends and family, encouraging them to borrow money to invest with him. The complaint alleges that, from July 2001 to January 2009, Wise raised more than $67 million from approximately 125 investors by touting his 10 to 15 years of experience in real estate investments and luring investors with promises of lucrative annual returns ranging from 12% to 22%. The complaint further alleges that Wise claimed to use investor funds to make short-term real estate loans that would be fully collateralized and assured investors that they could obtain their principal anytime on 24 to 48 hours notice. The complaint alleges Wise never funded real estate loans, never paid the promised returns to investors, and never honored investors' redemption requests.

The Honorable Mary H. Murguia, United States District Judge for the District of Arizona, on April 2 granted the Commission's application for a temporary restraining order against the defendants and issued orders freezing defendants' assets, prohibiting the destruction of documents, requiring accountings, and granting expedited discovery. On April 9, when the Court will hold a hearing on the Commission's motion for a preliminary injunction and appointment of a permanent receiver.

The Commission's complaint charges the defendants with violating the antifraud provisions 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 seeks, in addition to the emergency relief, preliminary and permanent injunctions, disgorgement with prejudgment interest, and civil penalties.

In a separate administrative action on April 3, the Commission forthwith suspended Wise from appearing or practicing before the Commission as an accountant, based on the Arizona State Board of Accountancy's revocation of Wise's license as a certified public accountant. In the Matter of Dan Wise, CPA, a/k/a Danny Wise, CPA, Admin. Proc. File No. 3-13430, Securities Exchange Act Release No. 59703; AAER No. 2959 (Apr. 3, 2009). [SEC v. Whispering Winds Properties, LLC; LM Beagle Properties, LLC; Karlena, Inc.; Axis International, Inc.; and Dan Wise aka Danny Wise, U.S. District Court for the District of Arizona, Case No. 2:09-CV-00676] (LR-20987)

SEC Obtains Asset Freeze in Ponzi Scheme Targeting Chinese-American Community in Dallas Area

The Securities and Exchange Commission has obtained an asset freeze to halt a multi-million dollar Ponzi scheme and affinity fraud targeting members of the Chinese-American community, primarily in the Dallas area.

The SEC has charged Weizhen Tang, who describes himself as the "Chinese Warren Buffett" according to the SEC's complaint, as well as a Canadian-based hedge fund that he controls. The SEC alleges that Tang raised between $50 million and $75 million for the Oversea Chinese Fund Limited Partnership from more than 200 investors, and has operated a Ponzi scheme with the hedge fund since at least 2006.

"This case represents another unfortunate example of a money manager who violated investors' trust," said Rose Romero, Director of the SEC's Fort Worth Regional Office. "The SEC will act aggressively to freeze the assets of such wrongdoers to the extent possible for investors."

The SEC's complaint, filed in federal court in Dallas, also charged Plano, Texas-based investment adviser WinWin Capital Management LLC as a defendant, and named two other Tang entities as relief defendants: WinWin Capital Partners LP, and Bluejay Investment LLC (d/b/a Vintage International Investment LLC). In granting the SEC's request for emergency relief for investors, U.S. District Judge Jane Boyle on April 3 entered a temporary restraining order, froze the defendants' assets, and appointed a receiver to marshal assets.

The SEC's complaint alleges that Tang told investors in February 2009 that in an effort to conceal substantial trading losses and attract new investors to the Oversea Chinese Fund, he posted false profits on investors' account statements and used funds from new investors to return principal and pay out at least $8 million in "fake" profits to other investors.

According to the SEC's complaint, Tang raised capital for the hedge fund from U.S. investors by offering and selling limited partnership interests in WinWin Capital Partners since November 2007. WinWin Partners had raised, as of March 10, 2009, almost $17.3 million in principal investments from approximately 75 U.S. investors, most of which are located in the Dallas area but also in California. At least $9.6 million of the money raised from U.S. investors remains unaccounted for.

The SEC's complaint charges, among other things, that the defendants violated the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. In addition to emergency and interim relief that has been obtained, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.

The SEC's investigation is continuing. [SEC v. Oversea Chinese Fund Limited Partnership, et al., Civ. Action No. 3-09CV0614-B (United States District Court for the Northern District of Texas)] (LR-20988)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change (SR-CBOE-2009-020) filed by the Chicago Board Options Exchange to change the close of trading hours on the last day of trading in expiring Quarterly Index Expirations 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 April 6. (Rel. 34-59676)

A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2009-019) relating to cancellation fees 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 April 6. (Rel. 34-59690)

A proposed rule change filed by the International Securities Exchange (SR-ISE-2009-16) relating to fee changes has become immediately 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 April 6. (Rel. 34-59691)

A proposed rule change filed by the International Securities Exchange (SR-ISE-2009-17) relating to changes to the Direct Edge ECN fee schedule applicable to ISE members has become immediately 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 April 6. (Rel. 34-59692)

A proposed rule change filed by the Chicago Board Options Exchange (SR-CBOE-2009-023) relating to temporary membership status and interim trading permit access fees 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 April 6. (Rel. 34-59694)

A proposed rule change (SR-ISE-2009-15) filed by the International Securities Exchange relating to quoting obligations of Second Market Competitive Market Makers 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 April 6. (Rel. 34-59701)

Approval of Proposed Rule Changes

The Commission has approved a proposed rule change (SR-DTC-2009-02) filed by the Depository Trust Company under Section 19(b)(1) of the Exchange Act to implement a Maturity Presentment Pend Function to replace the Maturity Presentment Contingency System. Publication is expected in the Federal Register during the week of April 6. (Rel. 34-59695)

The Commission approved a proposed rule change submitted under Section 19(b)(1) of the Securities Exchange Act of 1934 by the Chicago Board Options Exchange (SR-CBOE-2009-009) to amend its rules prohibiting members from functioning as market-makers. Publication is expected in the Federal Register during the week of April 6. (Rel. 34-59700)

Proposed Rule Changes

The Commission issued notice of filing of a proposed rule change submitted by the Financial Industry Regulatory Authority (SR-FINRA-2009-020) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to the FINRA Regulation Board composition and conforming changes to the FINRA Regulation By-Laws. Publication is expected in the Federal Register during the week of April 6. (Rel. 34-59696)

NASDAQ OMX PHLX filed a proposed rule change and Amendment No. 1 thereto (SR-Phlx-2009-23) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend the by-laws, rules and option floor procedure advices of NASDAQ OMX PHLX, Inc. Publication is expected in the Federal Register during the week of April 6. (Rel. 34-59697)

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