SEC VOTES TO REMOVE CREDIT RATINGS AS ELEGIBILITY FOR SHORT FORM REGISTRATION

The following is an excerpt from the SEC website: “Washington, D.C., July 26, 2011 – The Securities and Exchange Commission today voted unanimously to adopt new rules in light of the Dodd-Frank Wall Street Reform and Consumer Protection Act to remove credit ratings as eligibility criteria for companies seeking to use “short form” registration when registering securities for public sale. Forms S-3 and F-3 are the “short forms” used by eligible issuers to register securities offerings under the Securities Act. Companies that qualify for these short forms can offer securities “off the shelf” or on an expedited basis. Companies currently qualify to use these forms if they are registering an offering of non-convertible securities, such as debt securities, that have received an investment grade rating by at least one nationally recognized statistical rating organization (NRSRO). The new rules eliminate the credit ratings criteria and replace it with four new tests, one of which must be satisfied for an issuer to use Form S-3 or Form F-3. In order to ease transition for companies, the rules include a temporary, three-year grandfather provision. “This action is part of our effort to reduce reliance on credit ratings, as the Dodd-Frank Act requires all financial regulators to do,” said SEC Chairman Mary L. Schapiro. “The new rules provide an appropriate and workable alternative to credit ratings for determining whether an issuer should be able to use short form registration and have access to the shelf offering process.” # # # FACT SHEET Security Ratings Background Short-Form Eligibility Under the federal securities laws, a company offering securities must register the offer and sale of those securities with the SEC unless the sale is otherwise exempt. The SEC’s rules generally allow a non-asset-backed security issuer to use “short-form” registration if that company meets two categories of criteria. The first category related to issuers requires among other things that the company has been subject to the SEC’s reporting provisions and filing its periodic reports in a timely manner for at least one year. An issuer is required to meet all of the criteria in the first category. The second category contains a list of transaction requirements of which issuers need to satisfy only one of the criteria. One of the options in this category involves a company having at least $75 million in common equity held by unaffiliated shareholders. Another provision in this second category – that would allow an issuer to use short-form registration for an offering of non-convertible securities such as debt securities – provides that those securities be rated investment grade by at least one credit rating agency that is a nationally recognized statistical rating organization (NRSRO). If a company qualifies for short-form registration, it is allowed to rely on its quarterly, annual and other reports filed with the SEC to provide historical and future information about itself, rather than repeating the information in the prospectus or amending the prospectus as future reports are filed. The prospectus disclosure in these offerings describes the particular securities being offered and focuses on other offering-specific information. The ability to “incorporate by reference” historic and future SEC reports for the company information can provide significant cost and time savings for companies. The short-form registration forms include Form S-3 for domestic companies and Form F-3 for foreign private issuers. Shelf Registration Companies that are “short-form eligible” also are allowed to register securities “on the shelf.” This means that the companies can file registrations for future offerings and can do one or multiple offerings from the single registration in the future without needing any new SEC staff clearance. This shelf registration provides companies with flexibility to issue the securities when they choose. Often times, companies use this process when they are planning to offer securities on multiple occasions. Companies that are not short-form and shelf eligible are required to file a new registration for each public securities offering and have the SEC staff take action before completing the offering. The New Rules Form S-3 and Form F-3 Under the Securities Act of 1933 The new rules remove the condition for an NRSRO investment grade rating that is included in current short forms, Form S-3 and Form F-3, which are used by eligible issuers to register offerings of non-convertible securities under the Securities Act. Instead of the ratings criteria, the final rules allow for the use of Form S-3 or Form F-3 if the issuer satisfies one of the following four tests: The issuer has issued (as of a date within 60 days prior to the filing of the registration statement) at least $1 billion in non-convertible securities other than common equity, in primary offerings for cash, not exchange, registered under the Securities Act, over the prior three years. The issuer has outstanding (as of a date within 60 days prior to the filing of the registration statement) at least $750 million of non-convertible securities other than common equity, issued in primary offerings for cash, not exchange, registered under the Securities Act. The issuer is a wholly-owned subsidiary of a well-known seasoned issuer as defined under the Securities Act. The issuer is a majority-owned operating partnership of a real estate investment trust that qualifies as a well-known seasoned issuer. The final rules also include a temporary grandfather provision that allows an issuer to use Form S-3 or Form F-3 for a period of three years from the effective date of the amendments if it would have been eligible to register the securities offerings under the old provision. Form F-9 Under the Securities Act The final rules also rescind Form F-9, which is the form certain Canadian registrants use to register non-convertible investment grade debt. The primary advantage to Form F-9 over the only other available form (Form F-10) is that it does not require reconciliation to U.S. generally accepted accounting principles. Changes to Canadian regulations to require Canadian issuers to use International Financial Reporting Standards instead of GAAP will mean that reconciliation also will not be required on Form F-10. As a result, F-9 and F-10 will have the same requirements, so Form F-9 will be rescinded effective Dec. 31, 2012. Additionally, the final rules revise Form 40-F, the annual report form used by certain Canadian registrants, to ease the transition for issuers who previously filed registration statements on Form F-9. Other Rules and Forms There are other rules and forms that relied on similar criteria to the investment grade criteria in Form S-3 and Form F-3. The final rules revise the following rules and forms to refer to the new criteria in Form S-3 and Form F-3: Form S-4 and Form F-4 under the Securities Act. Schedule 14A under the Exchange Act. Rules 138, 139 and 168 under the Securities Act. Rule 134(a)(17) Under the Securities Act Securities Act Rule 134(a)(17) permits the disclosure of security ratings issued or expected to be issued by NRSROs in certain communications deemed not to be a prospectus or free writing prospectus, such as “tombstone ads” or press releases announcing offerings. The amendments remove this safe harbor. Instead, the determination of whether such information constitutes a prospectus will be made in light of all circumstances of the communication. What’s Next The new rules take effect 30 days after publication in the Federal Register, except the rescission of Form F-9 and amendments to remove references to Form F-9 in other rules and forms will be effective Dec. 31, 2012.”

SEC COMMISSIONER SPEAKS ON THE STATE OF THE MUNICIPAL SECURITIES MARKET

The following speech is an except from the SEC website: "Speech by SEC Commissioner: Statement at SEC Field Hearing on the State of the Municipal Securities Market by Commissioner Elisse B. Walter U.S. Securities and Exchange Commission Birmingham, AL July 29, 2011 Good morning, and thank you Mayor McBrayer, for that kind introduction, and for welcoming us to Homewood. It is a pleasure to be here with so many knowledgeable municipal market participants who are joining us today to give us the benefit of their expertise on issues of central importance to the municipal securities market. For those of you joining by webcast, thank you for tuning in. I am sure that all of you were looking forward to hearing from SEC Chairman Mary Schapiro this morning. Unfortunately, due to a family health emergency, Chairman Schapiro is not able to participate in today’s hearing. She sends her sincere regrets. The distinguished Chairman of the House Financial Services Committee, the Honorable Spencer Bachus, had also hoped to be with us today. However, as we all know, Capitol Hill is a particularly busy place at the moment. Due to the urgency of the national debt ceiling negotiations, Chairman Bachus is also unable to attend today’s hearing in person. We are very pleased, however, that Larry Lavender, the Majority Staff Director of the House Financial Services Committee, will be speaking to you on behalf of Chairman Bachus after I conclude my opening remarks. OVERVIEW OF FIELD HEARINGS Given the SEC’s limited authority over municipal securities, our options for addressing problems in this market have historically been quite limited. However, as the municipal market grows larger and more complex, it is increasingly important that we redouble our efforts and give this critical marketplace much needed concentrated and greater attention -- and we are doing just that. As many of you know, the SEC was created to be, in the words of one early Commission Chairman, “the investor’s advocate.” That means we work to help ensure that investors are protected and have the information they need to make informed decisions. As their advocates, we are concerned that investors in the municipal securities market may not have the protections and access to information that they need. We are also concerned that they may not be able to make fully informed investment decisions regarding the prices of securities they wish to buy or sell in many cases or the spreads demanded by the brokers who make the market. These conditions can lead to market distortions and prevent investors from accurately calculating risk when making investments, potentially leaving them more exposed than they understand or wish to be. That is why we have undertaken a concerted effort to study the municipal securities market. Last year, Chairman Schapiro asked me to lead an initiative to review the state of the municipal market by gathering input from market participants and identifying ways in which the Commission can improve the state of the market for investors. Today’s hearing is the third in a series of field hearings designed to elicit the analyses and opinions of a broad array of participants in the municipal market -- our first hearing was in San Francisco last September, and our second was held in Washington, DC in December. We scheduled these hearings because we believe policy-makers should be informed by experiences of those who live and work outside of Washington, D.C. This is particularly true with respect to municipal securities, given their impact on local communities and retail investors. In addition to these field hearings, our team has spent a tremendous amount of time over the past year meeting and speaking with interested parties on issues spanning from disclosure to accounting to market dynamics to credit ratings, and beyond. I can say from experience –- having participated in most of these meetings –- that this has been an extremely interesting, informative and rewarding process. As we draw to the close of the “information gathering stage” of our initiative, Commission staff will begin to prepare a report concerning what we have learned, including their recommendations for further action that we should pursue. These may include recommendations for changes in legislation, regulations, and industry practice. A BROADER IMPACT The SEC’s focus is and should be on protection of investors. However, investors who place their funds in municipal securities often are also residents and taxpayers of those municipalities. And, investors, taxpayers and municipal officials often have the same concerns about transparency and fair dealings in municipal finance. The case that may most starkly illustrate the alignment of investor and taxpayer interests happened right here, in Jefferson County. In 2009, an SEC enforcement action resulted in a settlement with JP Morgan, which we asserted used corrupt political contacts to win the role of underwriter for sewage system bond offerings -- and then helped Jefferson County enter into some of the financing and refinancing strategies that cost county ratepayers hundreds of millions of dollars. As a result of the SEC action, JP Morgan paid a $25 million penalty, which was sent to Jefferson County, and also paid Jefferson County an additional $50 million in compensation. And, most significantly, JP Morgan agreed to cancel more than $647 million in claimed termination fees. But, I strongly suspect that enforcement alone is cold comfort to many of those who have been affected by what has happened in Jefferson County. As you know, this has been a particularly difficult time. Over the past month, the County has been operating under a standstill agreement, in an attempt to avoid filing for bankruptcy. While our project began over a year ago, the confluence of events highlights the importance of municipal securities not only to the securities market and investors, but also to communities and taxpayers. It reinforces the fact that investors need to get good information from municipalities, and municipalities need to get fair and honest advice from financial professionals. We are here to explore whether investors need additional tools so that they can make better decisions and whether regulators need additional tools to do their best to enhance the soundness of, and investor confidence in, the municipal securities markets. OVERVIEW OF TODAY’S HEARING Today’s panels will focus on issues related to distressed communities, small issuers, disclosure, derivatives and pre-trade price transparency. Our first panel on distressed communities will explore some of the causes of financial distress for municipalities, the options available to distressed municipalities, including bankruptcy, and the consequences of various courses of action. Next, our panel on small issuers will provide an opportunity to hear about the practical implications of issuer size on issuers’ activities in the market, their interactions with financial intermediaries and their ability to meet regulatory requirements. And, our panel on derivatives will touch on municipal entities’ use of derivatives, municipal officials’ understanding of derivatives’ risks, the role of other market participants in municipal derivatives, and disclosures relating to these complex agreements. We will also be addressing the two topics that have been our principal areas of focus: disclosure and pre-trade price transparency. On disclosure, we have heard consistently that investors need more timely and accurate information from issuers in order to make informed decisions. On the other hand, we hear from issuers about the practical limitations they face: difficulties aggregating fiscal information from constituent governments, resource constraints and other challenges. Our panel on disclosure will feature issuer and investor representatives, and I look forward to an engaging discussion exploring both sides’ perspectives. Regarding pre-trade price transparency, investors tell us that they face challenges because municipal securities – like other types of bonds – are traded for the most part through decentralized, dealer intermediated, over-the-counter markets. Unfortunately, information about quotes and trading interest in these markets is not readily available to retail investors. Great strides have been made in terms of post-trade transparency of information in the last few years, thanks to real-time reporting and the EMMA system available via the website of the Municipal Securities Rulemaking Board, or MSRB. However, because of the low liquidity levels of many municipal bonds, trade data can be weeks or months old –- and, therefore, not very helpful to investors who are trying to assess bond pricing. Investors need better information and better access both to tap liquidity and to provide it. Our panel on pre-trade price transparency will focus on the existing landscape for pricing information in the municipal market, and ways in which the market can move toward giving investors better information, and consequently, greater confidence in pricing. We have gathered an impressive group of knowledgeable individuals representing a wide spectrum of viewpoints for all our panels today, and I am confident that they will shed light on –- and advance the discussion of –- all of these important issues. What we hear from today’s panelists, along with what we have gleaned from our prior hearings and countless meetings and conference calls, will be instrumental in informing the recommendations that will be included in the SEC staff report. INTRODUCTIONS And now, let me introduce you to my colleagues who are here with us today. I am joined at this table by Robert Cook, the Director of the Division of Trading and Markets, the Division that helps the Commission carry out its mission of maintaining fair, orderly, and efficient markets for the benefit of investors. Robert’s division currently houses the SEC’s Office of Municipal Securities. Our role will be to listen, learn and engage with the panelists by asking questions. And, in addition to welcoming you, I must remind you, on behalf of myself and all other Commission participants, of the Commission's standard disclaimer –- that is that our remarks today represent our own views, and not necessarily those of the Commission, other Commissioners, or members of the staff.1 The moderators of today's panels are Dave Sanchez, Attorney-Fellow, Office of Municipal Securities, Division of Trading and Markets; Amy Starr, Chief, Office of Capital Market Trends, Division of Corporation Finance; and Alicia Goldin, Special Counsel, Office of Chief Counsel, Division of Trading and Markets. My appreciation goes as well to my counsels Cyndi Rodriguez and Lesli Sheppard who have been by my side throughout this effort, to the entire team of municipal securities experts at the Commission – including Will Hines, from the Division of Corporation Finance and Suzanne McGovern from the Office of Compliance, Inspections and Examinations – who are here with us today; and to all of those who are busy at work back in DC, including Rachel Hurnyak from Chairman Schapiro's office who has handled the logistics for all of our hearings. Rachel has been incredibly helpful to us up until her very last day at Commission headquarters –- which happens to be today –- and we will miss her greatly. We also want to thank Ammani Nagesh, from Chairman Schapiro’s office -- who probably greeted you as you walked in today –- and who is ensuring that today’s event runs smoothly. And, we are happy to be joined as well by the Director of the Commission’s Atlanta Regional Office, Rhea Dignam, as well as Peter Diskin from that office, Judy Burns from the Office of Public Affairs and our audio-visual experts, Myron Fears and Tony Cook. I would also like to welcome and introduce our fellow regulators in attendance: from the MSRB, we have Ernie Lanza, Deputy Executive Director and General Counsel and from the Financial Industry Regulatory Authority (“FINRA”), we have Malcolm Northam, Director of Fixed Income Securities. The MSRB and FINRA, as you know, play critical roles in regulating professionals who operate in the municipal market and their assistance has been invaluable. Also participating in today’s event are former SEC Commissioner Rick Roberts and the Director of the Alabama Securities Commission, Joe Borg. We have with us as well a number of other highly knowledgeable state and local officials — Luther Strange, Alabama Attorney General; Bob Scott, Assistant City Manager and Chief Financial Officer of the City of Carrollton, Texas; Charlie Duggan, City Manager of the City of Auburn, Alabama; Ben Watkins, Director of the Division of Bond Finance for the State of Florida; and Mary-Margaret Collier, Director of the Office of State and Local Finance in the State of Tennessee. I am also delighted that Treasurer David H. Lillard from the State of Tennessee and, I believe, a number of Jefferson County Commissioners are in the audience today. And of course, we are extremely grateful to all of our panelists for agreeing to participate in our field hearing – many of whom have travelled in order to join us today. Thank you. Last, but not least, I’d like to thank Chairman Bachus for taking a strong interest in these important issues. We very much appreciate the assistance that Chairman Bachus’s staff has provided as we planned this hearing, and we are pleased that Larry Lavender, Walton Liles and Kevin Edgar are here with us today. I would now like to welcome Larry Lavender to make a few remarks this morning. [Larry Lavender Remarks] Thank you, Larry. I will conclude by providing a brief overview of the mechanics of today’s hearing. STRUCTURE OF TODAY’S HEARING AND OTHER LOGISTICS We have an exciting agenda for today –- packed with interesting and timely topics. The format of today's field hearing will entail five panels. As moderators, Dave, Amy and Alicia will introduce their topics and panelists. Each panelist will then make brief opening remarks. Following the opening remarks, the panelists will be asked questions by the moderator and those of us at this table. We will look to each panel to help us to understand better the particular concerns of different market participants, highlight key areas for improvement, and provide some concrete ideas for moving forward. At our past hearings, panelists have engaged with us and with each other in candid and lively discussions, and I look forward to similar engagement today. A few housekeeping items before we begin. First, we'd like to ask the panelists, moderators, and other questioners to please stand your nameplate vertically when you would like to speak. Second, there will be a lunch break from 12:30 to 2 p.m. There are a number of restaurants within walking distance of Rosewood Hall. Our last panel of the day will conclude by 4:00 p.m. A live video stream of this hearing is available on the Commission’s website. Additionally, a written transcript of today's event will be made available on the Commission's website, as well as any written statements and presentations provided by the panelists. Finally, we encourage investors and all other interested parties to submit comments related to the municipal securities market by using the comment form on the SEC website or sending an e-mail to munifieldhearings@sec.gov. Again, we’re so pleased that you are here today and hope this will prove to be an enlightening experience for all. I will now turn it over to Dave to start our first panel. Endnotes 1 The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publications or statements by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission, other Commissioners, or the staff."

FDIC TAKES OVER VIRGINIA BUSINESS BANK

The following excerpt is from an e-mail sent out by the FDIC: Virginia Business Bank, Richmond, Virginia, was closed today by the Virginia State Corporation Commission. The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Xenith Bank, Richmond, Virginia, to assume all of the deposits of Virginia Business Bank. The sole branch of Virginia Business Bank will reopen on Monday as a branch of Xenith Bank. Depositors of Virginia Business Bank will automatically become depositors of Xenith Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Virginia Business Bank should continue to use their existing branch until they receive notice from Xenith Bank that it has completed systems changes to allow other Xenith Bank branches to process their accounts as well. This evening and over the weekend, depositors of Virginia Business Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual. As of March 31, 2011, Virginia Business Bank had approximately $95.8 million in total assets and $85.0 million in total deposits. In addition to assuming all of the deposits of the failed bank, Xenith Bank agreed to purchase essentially all of the assets. Customers with questions about today's transaction should call the FDIC toll-free at 1-800-837-0215. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/vbb.html. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.3 million. Compared to other alternatives, Xenith Bank's acquisition was the least costly resolution for the FDIC's DIF. Virginia Business Bank is the 59th FDIC-insured institution to fail in the nation this year, and the first in Virginia. The last FDIC-insured institution closed in the state was Imperial Savings and Loan Association, Martinsville, on August 20, 2010."

FORMER WASTE MANAGEMENT CFO ORDERED TO PAY $25 MLLION

Te folowing excerpt is fromthe SEC website: July 29, 2011 Former CFO of Waste Management Ordered to Pay $2.5 Million The Securities and Exchange Commission announced today that on July 28, 2011, the United States District Court for the Northern District of Illinois entered an Amended Final Judgment against James E. Koenig, the former Chief Financial Officer of Waste Management Corporation, ordering that he pay $2.5 million in SEC v. James E. Koenig, 02 C 2180 (N.D. Ill. filed Mar. 26, 2002). Koenig was ordered to make an upfront payment of $1.25 million and to pay the remaining $1.25 million in regular installments over the next two years. The Commission’s complaint alleged that beginning in 1992 and continuing into 1997, Koenig and others engaged in a systematic scheme to falsify and misrepresent Waste Management’s financial results with profits being overstated by $1.7 billion. In June 2006, after an 11-week trial, a jury returned a verdict in the Commission’s favor against Koenig on all 60 violations charged, including securities fraud, falsifying company books and records, making false statements in filings with the Commission, lying to auditors, and aiding and abetting the company’s violations. On December 21, 2007, following a two-day bench trial on remedies, the district court entered a Final Judgment against Koenig that permanently barred him from acting as an officer or director of a public company, and enjoined him from violating, or aiding and abetting violations of, Sections 10(b), 13(a), and 13(b)(2)(A) of the Securities Exchange Act of 1934; Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, and 13b2-2 thereunder; and Section 17(a) of the Securities Act of 1933. The judgment also required Koenig to pay disgorgement, prejudgment interest, and civil penalties. On February 26, 2009, the U.S. Court of Appeals for the Seventh Circuit affirmed all issues of liability and trial procedure, but remanded for further proceedings with respect to the monetary amount of the judgment. On November 23, 2009, the district court on remand reaffirmed its prior Final Judgment, and Koenig appealed. The Amended Final Judgment represents a compromise reached through mediation before the Seventh Circuit’s Settlement Conference Office while the case was on appeal. The permanent officer and director bar and injunction remain unchanged and in full force and effect."

5 GO TO PRISON FOR A@O RESOURSE MANAGEMENT LTD. FRAUD SCHEME

The following case is an excerpt from the Department of Justice website: July 22, 2011 "WASHINGTON – Five employees for A&O Resource Management Ltd. and various related entities – including two executives – were sentenced today for their roles in a $100 million fraud scheme with more than 800 victims across the United States and Canada. The sentences were announced by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division. The five individuals were sentenced by U.S. District Judge Robert E. Payne. Russell E. Mackert, 52, general counsel for A&O, was sentenced to 188 months in prison; Brent Oncale, 36, former owner and founder of A&O, was sentenced to 120 months in prison; David White, 41, the former president of A&O, was sentenced to 60 months in prison; Eric M. Kurz, 47, a wholesaler of A&O investment products, was sentenced to 60 months in prison; and Tomme Bromseth, 69, an A&O sales agent in the Richmond area, was sentenced to 36 months in prison. “The impact of this massive fraud on many of A&O’s investor victims has been disastrous,” said U.S. Attorney MacBride. “Hundreds of elderly investors invested their life savings with A&O and saw it all vanish in an instant. These investors were not looking for quick cash, just a safe alternative to invest their retirement funds. The safety, security, and no-risk nature of the investment was critical to the sales pitch, and it was all a big fat lie.” “Brent Oncale and his co-conspirators operated a sham investment company that turned fraud and deceit into a business model,” said Assistant Attorney General Breuer. “They stole millions from hundreds of unsuspecting investors, pocketing huge sums for themselves. Today’s sentences reflect the severity of these cowardly and costly crimes.” All five men pleaded guilty in the fall of 2010 and early 2011 for their roles in the fraud scheme at A&O, which falsely marketed life settlement products to investors, many of whom were elderly. The conspirators at A&O defrauded investors by making misrepresentations about A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds. When state regulators began to scrutinize A&O’s investment products, conspirators manufactured a sham sales transaction to “sell” A&O to an offshore shell corporate entity named Blue Dymond and later to another offshore shell corporate entity named Physician’s Trust. However, A&O and Physician’s Trust was still secretly controlled by A&O principals and their conspirators. On June 6, 2011, the hedge fund manager of A&O, Adley H. Abdulwahab, 35, of Houston, was convicted by a jury in Richmond, Va., of one count of conspiracy to commit mail fraud, five counts of mail fraud, one count of conspiracy to commit money laundering, five counts of money laundering and three counts of securities fraud. A founder of A&O, Christian Allmendinger, 39, was convicted by a jury on March 23, 2011, of one count of conspiracy to commit mail fraud, two counts of mail fraud, one count of conspiracy to commit money laundering, two counts of money laundering and one count of securities fraud. Abdulwahab is scheduled to be sentenced on Sept. 28, 2011, and Allmendinger is scheduled to be sentenced on Aug. 14, 2011. They face up to 20 years in prison on each count except the securities fraud counts, on which they face up to five years in prison. This investigation was conducted by the U.S. Postal Inspection Service, Internal Revenue Service, and FBI, with significant assistance from the Texas State Securities Board and the Virginia Corporation Commission. These cases are being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg from the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr., of the Criminal Division’s Fraud Section. The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force."

FORMER HEDGE FUND MANAGER TO PAY $1 MILLION PENALTY

The following case is an excerpt from the CFTC website: “Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and simultaneously settling charges that Christopher Louis Pia of North Castle, N.Y., while employed as portfolio manager for Moore Capital Management, LLC (Moore Capital), attempted to manipulate the settlement prices of palladium and platinum futures contracts on the New York Mercantile Exchange (NYMEX). Moore Capital is a predecessor of Moore Capital Management, LP. The CFTC order requires Pia to pay $1 million civil monetary penalty. It also permanently bans Pia from trading CFTC-regulated products during the closing period of the markets and from trading CFTC-regulated products in platinum and palladium. The order further requires Pia to distribute a copy of the CFTC order to current investors and to current and future employees, principals, and officers and to provide a disclosure document setting out the CFTC action to existing and prospective clients. The CFTC order finds that, from at least November 2007 until May 2008 (relevant period), Pia attempted to manipulate the settlement prices of palladium and platinum futures contracts by engaging in a trading practice known as “banging the close.” Specifically, Pia caused to be entered market-on-close buy orders that were executed in the last ten seconds of the closing period for both contracts in an attempt to exert upward pressure on the settlement prices of the futures contracts. Pia engaged in this trading strategy at Moore Capital frequently throughout the relevant period, the order finds. According to CFTC Division of Enforcement Director David Meister: “To protect market participants and promote market integrity, individuals who attempt to manipulate commodity prices must and will be held personally accountable. As demonstrated by today's action, the Commission will not hesitate to impose significant sanctions on such traders.” The CFTC order further requires that a monitor ensures Pia’s compliance with the order for a five-year period and establishes undertakings related to any entity Pia owns or controls. The order also imposes registration conditions if Pia or any of his entities become registered with the CFTC for a period of five years from the date of the order. Within 120 days of the issuance of the order, Pia must submit a report to the Commission on his compliance with the undertakings required in the order. On April 29, 2010, the CFTC issued an order filing and settling similar charges of attempted manipulation of platinum and palladium futures settlement prices in 2007 – 2008 and supervisory violations against Moore Capital Management, LP (MCM), Moore Capital Advisors, LLC (MCA), both based in New York, N.Y., and Moore Advisors, Ltd. (MA), a Bahamian entity. The CFTC order required MCM, MCA, and MA jointly and severally to pay a $25 million civil monetary penalty and placed restrictions on their CFTC registrations, including a two-year restriction on trading during the closing periods of the palladium and platinum futures and options markets (see CFTC Press Release 5815-10, April 29, 2010). The CFTC thanks the CME Group, the parent company of the NYMEX, for its assistance.”