CFTC SETTLES CHARGES OF FRAUD WITH OFF-EXCHANGE FOREIGN CURRENCY DEALER

The following is from the CFTC website: “Washington, DC – The Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges that Roy Scarboro, Jr. of Archdale, N.C., fraudulently solicited approximately $713,000 from customers to trade off-exchange foreign currency (forex). The CFTC order also finds that Scarboro misappropriated funds for his personal use and issued false account statements to conceal that he lost most of the funds trading. Scarboro has never been registered with the CFTC. The CFTC order requires Scarboro to pay a $350,000 civil monetary penalty. The order also permanently prohibits Scarboro from trading on a CFTC-registered entity and from registering or seeking exemption from registration with the CFTC. According to the CFTC order, beginning in or about June 2009, Scarboro solicited and accepted approximately $713,000 from at least six individuals for the purpose of trading off-exchange leveraged forex through a pool named Capital Asset Management Fund, L.P. (CAMF). Scarboro was CAMF’s General Partner and Manager. In his solicitations, Scarboro represented to at least one participant that only 20 percent of CAMF’s funds would be used to trade forex, with the remainder being invested in U.S. Treasuries. In fact, Scarboro used participants’ funds to trade forex only and never invested in any type of U.S. Treasury instrument, according to the order. The CFTC order further finds that Scarboro deposited approximately $612,000 in forex trading accounts at registered Futures Commission Merchants. He sustained consistent losses as a result of his trading, with no profitable months, and lost approximately $597,000 of his participants’ funds, according to the order. To conceal his trading losses, the order finds, Scarboro issued false monthly account statements to CAMF’s participants that showed at various times that the participants were either making modest profits or incurring only modest losses. In addition, Scarboro falsely reported to participants on these account statements that he was taking no allocation of the profits for himself as CAMF’s General Partner. The order also finds that Scarboro misappropriated at least $59,000 of participants’ funds. In a related criminal proceeding, Scarboro was sentenced on May 4, 2011 to 26 months imprisonment and required to pay $682,663.62 in restitution (United States v. Roy E. Scarboro, Case Number 3:10-cr-254 (W.D.N.C.))."

FIRST NATIONAL BANK OF FLORIDA WAS CLOSED AND THE DEPOSITS WILL BE ASSUMED BY CHARTERBANK OF GEORGIA

The following is an excerpt from a press release e-mail sent out by the FDIC: “The First National Bank of Florida, Milton, Florida, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with CharterBank, West Point, Georgia, to assume all of the deposits of The First National Bank of Florida. The eight branches of The First National Bank of Florida will reopen during their normal business hours beginning Saturday as branches of CharterBank. Depositors of The First National Bank of Florida will automatically become depositors of CharterBank. 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 The First National Bank of Florida should continue to use their existing branch until they receive notice from CharterBank that it has completed systems changes to allow other CharterBank branches to process their accounts as well. This evening and over the weekend, depositors of The First National Bank of Florida 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 June 30, 2011, The First National Bank of Florida had approximately $296.8 million in total assets and $280.1 million in total deposits. In addition to assuming all of the deposits of the failed bank, CharterBank agreed to purchase essentially all of the assets. The FDIC and CharterBank entered into a loss-share transaction on $216.3 million of The First National Bank of Florida's assets. CharterBank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $46.9 million. Compared to other alternatives, CharterBank's acquisition was the least costly resolution for the FDIC's DIF. The First National Bank of Florida is the 71st FDIC-insured institution to fail in the nation this year, and the eleventh in Florida. The last FDIC-insured institution closed in the state was Lydian Private Bank, Palm Beach, on August 19, 2011.”

SEC FILES SUBPOENA ENFORCEMENT ACTION AGAINST DELOITE & TOUCHE SHANGHI

The following excerpt is from the SEC website: “The Securities and Exchange Commission today filed a subpoena enforcement action against Deloitte Touche Tohmatsu CPA Ltd. for failing to produce documents related to the SEC’s investigation into possible fraud by the Shanghai-based public accounting firm’s longtime client Longtop Financial Technologies Limited. According to the SEC’s application and supporting papers filed in U.S. District Court for the District of Columbia, the SEC issued a subpoena on May 27, 2011, and D&T Shanghai was required to produce documents by July 8, 2011. Although D&T Shanghai is in possession of vast amounts of documents responsive to the subpoena, it has not produced any documents to the SEC to date. As a result, the Commission is unable to gain access to information that is critical to an investigation that has been authorized for the protection of public investors. According to the court papers, D&T Shanghai was Longtop’s auditor since at least 2007, and the firm consented that its audit reports for Longtop could be filed annually with the SEC while knowing full well that they would be relied upon by U.S. investors. On May 22, D&T Shanghai resigned as Longtop’s auditor after discovering numerous improprieties during an audit for the year ended March 31, 2011. In its resignation letter, which was included in a Form 6-K furnished by Longtop on May 23, D&T Shanghai identified numerous indicia of financial fraud at Longtop and indicated that D&T Shanghai’s prior year audit reports for Longtop could no longer be relied upon by investors. As part of the Longtop investigation, the SEC staff issued and served the subpoena on D&T Shanghai seeking production of documents related to the incomplete audit of Longtop for the year ended March 31 as well as prior year audits that D&T Shanghai completed. According to the court papers, these documents may reveal information about D&T Shanghai’s discovery of false financial records at Longtop, how any fraud schemes at Longtop were able to continue undetected, and basic information necessary to ferret out whether there was a fraud, who was behind it, how significant it was, and how it was conducted. The SEC’s court papers note that Longtop is a foreign private issuer whose American depositary shares (ADSs) traded on the NYSE from the date of its initial public offering in October 2007 until May 17, 2011, when the NYSE halted trading prior to delisting Longtop’s securities in August 2011. When trading was halted, Longtop’s ADSs were priced at $18.93 per share with 57 million shares outstanding, resulting in a market capitalization of approximately $1.08 billion. Pursuant to its application filed in court, the SEC is seeking a court order directing D&T Shanghai to show cause why the court should not enter an order requiring D&T Shanghai to produce documents responsive to the subpoena.”

SEC GETS TEMPORARY RESTRAINING ORDER TO RESTRAIN A STOCK TRANSFER COMPANY FROM CONTINUED VIOLATIONS

The following is from the SEC website: “On September 2, 2011, the Securities and Exchange Commission obtained a temporary restraining order and other relief in a civil injunctive action in the United States District Court for the District of Utah against National Stock Transfer, Inc. (National), National’s president Kay Berenson-Galster (Galster) and National’s owner, Roger Greer (Greer). The complaint alleges that, for at least five years, National Stock Transfer, Inc., a transfer agent registered with the Securities and Exchange Commission, has been violating federal securities laws and important obligations it has as a transfer agent. The Complaint alleges, among other things, that National has failed to report lost or stolen securities in a timely manner, failed to maintain certain records, failed to maintain control books for all of its issuers and failed to file its annual report with the Securities and Exchange Commission. During the time period covered by the complaint, National acted as the transfer agent for 58 issues of common and preferred stock. National has recently been physically locked out of its office by its creditor, Woodward Capital Partners, LLC, as part of a private state court case. The Commission has moved the court for a temporary restraining order and preliminary injunction against National and its principals, enjoining them from continued violations. The Court order granted the temporary restraining order against future violations of the federal securities laws regulating transfer agents, accelerated discovery and enjoined further litigation in the private state court action. The Commission’s complaint charges National with violations of Sections 17(a)(3) and 17A(d) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 17Ad-2, 17f-1, 17f-2(a), 17Ac2-1(c), 17Ac-2-2, 17Ad-6, 17Ad-7, 17Ad-10, 17Ad-13, 17Ad-15(c), 17Ad-17 and 17Ad-19 thereunder, and Galster and Greer with aiding and abetting violations of Sections 17(a)(3) and 17A(d) of the Exchange Act and Rules 17Ad-2, 17f-1, 17f-2(a), 17Ac2-1(c), 17Ac-2-2, 17Ad-6, 17Ad-7, 17Ad-10, 17Ad-13, 17Ad-15(c), 17Ad-17 and 17Ad-19 thereunder. The complaint also seeks civil penalties against National, Galster and Greer.”

MAN INDICTED FOR LYING TO THE SEC

The following excerpt is from the SEC web site: The Commission announced that on August 24, 2011, the United States Attorney’s Office for the Southern District of Florida unsealed an Indictment charging Steven Steiner a/k/a Steven Steinger, a defendant in a now settled SEC action, with obstructing justice by lying to the SEC. The 54 count Indictment charges Steiner, along with Henry Fecker, III, with money laundering and other violations. According to the Indictment, Steiner and Fecker, among other things, concealed assets and lied in financial statements that they submitted to the SEC. Steiner and Fecker submitted the financial statements during settlement negotiations to resolve the SEC’s case against Steiner for his antifraud and other violations in a billion dollar offering fraud conducted by Mutual Benefits Corporation (MBC). Fecker was the sole officer and director of Camden Consulting, Inc., a relief defendant in that case. The Commission first halted the on-going fraud at MBC in May 2004 when it filed a contested emergency civil enforcement action against MBC and its principals, including Steiner’s brothers, Joel and Leslie Steinger. In its complaint, the SEC alleged that the defendants had raised over $1 billion from more than 29,000 investors through a fraudulent, unregistered offering of securities in the form of fractionalized interests in viatical and life settlements. The SEC obtained a restraining order to halt the alleged fraud at MBC, and thereafter a receiver was appointed by the United States District Court for the Southern District of Florida (the “MBC Receiver”), to identify and trace the assets of MBC. In June 2005, the SEC filed an amended complaint adding Steiner as a defendant and naming SKS Consulting, Inc. (SKS) a company he controlled, and Camden, as relief defendants. In the amended complaint, the SEC alleged that Steiner was the "public face" of MBC, who participated in all or most initial sales training sessions for new in-house and outside sales agents, met with prospective and existing MBC investors, and made misrepresentations to investors about the safety of investing with MBC and the manner in which it obtained life expectancies for the insurance policies that formed the basis of an investment in MBC. The SEC also alleged that Fecker – Steiner’s life partner – was Camden’s sole officer and director and shared signatory authority with Steiner on the company’s bank accounts. In January 2006, the SEC filed a second amended complaint and further alleged relief defendant Camden acted as a conduit for MBC to make undisclosed payments to Steiner. On April 10, 2007, the Court entered a settled Final Judgment of Permanent Injunction and Other Relief against Steiner and Relief Defendants SKS and Camden. The Final Judgment enjoins Steiner from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The Final Judgment also holds Steiner, SKS, and Camden jointly and severally liable for disgorgement and prejudgment interest in the amount of $5,000,000, but orders them to pay $3,925,000 based on their financial statements and other information submitted to the Commission and waives the remainder of the amount and did not impose a penalty based on the financial information. According to the Indictment, in the years after 2004 when MBC was shut down, Steiner and Fecker engaged in a series of transactions to hide assets from the SEC and the MBC Receiver by placing funds attributable to Steiner with third parties or in Fecker’s name alone, and later by causing third parties to make payments of monies due to Steiner, instead to Fecker. Fecker used the funds to support a lavish lifestyle for Fecker and Steiner. To obtain a favorable settlement of the SEC’s case against Steiner, SKS, and Camden, the Indictment alleges that in 2006 and early 2007, Steiner and Fecker submitted a series of false and misleading documents to conceal their true financial condition. The Indictment further alleges that in late 2009, to further conceal assets from the SEC and the MBC receiver, Steiner sold a luxury New York apartment for $1.3 million, but caused false documents to state that the sales price was $1.1 million, and submitted these documents to the SEC and the MBC Receiver. The Indictment alleges that Steiner caused the purchaser to make an additional $200,000 in undisclosed side payments to Fecker, and that these undisclosed and concealed funds were thereafter used to support the lavish lifestyle of Steiner and Fecker. To further thwart the SEC’s efforts to recover assets attributable to MBC, the Indictment alleges that Steiner provided false and misleading testimony under oath to the MBC Receiver concerning his assets and financial condition. The SEC’s actions regarding Mutual Benefits resulted in injunctions and other relief against eight defendants and eight relief defendants, and orders to pay disgorgement and civil penalties totaling $30 million. In addition, before the August 24 Indictment, the United States Attorney’s Office for the Southern District of Florida had charged 10 defendants in criminal actions for their roles in the fraud. The SEC acknowledges the work of the United States Attorney’s Office for the Southern District of Florida, the Federal Bureau of Investigation, Miami Field Office, and the Internal Revenue Service, Criminal Investigation Division in this matter.”

SEC CHARGES EXECUTIVE AND FIRM WITH INSIDER TRADING SCHEME INVOLVING MOLDFLOW CORPORATION, AUTODESK, INC. AND SALESFORCE,COM, INC

The following is an excerpt from the SEC website: “On August 31, 2011, the Securities and Exchange Commission charged James F. Turner II and his New Jersey-based hedge fund firm Clay Capital Management, LLC with engaging in an insider trading scheme that involved the securities of three companies – Moldflow Corporation, Autodesk, Inc. and Salesforce.com, Inc. The SEC also charged Turner’s brother-in-law Scott A. Vollmar, Turner’s friend Scott A. Robarge and Vollmar’s neighbor Mark A. Durbin for their roles in the scheme. In total, the scheme generated illicit gains of nearly $3.9 million. Filed in the U.S. District Court for the District of New Jersey, the SEC’s complaint alleges that Vollmar was a director of business development for Autodesk and tipped Turner and Durbin with inside information about Autodesk’s planned tender offer for Moldflow in advance of Autodesk’s public merger announcement on May 1, 2008. Turner traded on the information in his personal accounts, his family members’ accounts and the account of his hedge fund, Clay Capital Fund, LP. Turner also tipped Robarge about the tender offer and recommended that several other friends and family members purchase Moldflow stock. Robarge and Durbin traded on the inside information in their personal accounts. Robarge also recommended that one of his friends buy Moldflow stock. In total, the traders made illicit gains of $2.3 million from their trading in Moldflow stock. According to the SEC’s complaint, Vollmar also tipped Turner with inside information about Autodesk’s fourth quarter 2008 earnings in advance of Autodesk’s public earnings announcement on February 26, 2008. Turner traded on the information in his personal accounts, his family members’ accounts and the Clay Fund’s account. He again tipped Robarge and recommended that several other friends and family members sell short Autodesk stock and purchase Autodesk put options. In total, the traders made illicit gains of nearly $1.1 million from their trading in Autodesk securities. The SEC’s complaint further alleges that Robarge, a recruiting technology manager for Salesforce at the time, tipped Turner with confidential information about Salesforce’s performance in advance of the company’s public earnings announcement on February 27, 2008. Turner traded on the inside information in his personal accounts, his family members’ accounts and the Clay Fund’s account. Turner also recommended that several other friends and family members, including Vollmar, purchase Salesforce stock and call options. Robarge traded on the information in his personal account and recommended that one of his friends buy Salesforce securities. In total, the traders made illicit gains of nearly $500,000 from their trading in Salesforce securities. The SEC alleges that Clay Capital, Turner and Vollmar violated Section 17(a) of the Securities Act of 1933 and that Clay Capital, Turner, Vollmar, Robarge and Durbin violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. Without admitting or denying the SEC’s allegations, Robarge and Durbin have consented to the entry of final judgments permanently enjoining them from violating Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder. Robarge also agreed to pay disgorgement of $232,591.91, prejudgment interest of $31,884.93, and a penalty of $232,591.91. Durbin agreed to pay disgorgement of $8,391.26, prejudgment interest of $1,110.86, and a penalty of $8,391.26. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA) and also thanks the U.S. Attorney’s Office for the District of New Jersey and the Federal Bureau of Investigation for their assistance in this matter.”