FINAL JUDGMENT ON GALLEON INSIDER TRADING CASE

The following excerpt is from the SEC website: October 5, 2011 “States District Judge, United States District Court for the Southern District of New York, entered a Final Judgment on Consent as to Steven Fortuna in the SEC's insider trading case, SEC v. Galleon Management, LP, et al., 09-CV-8811 (SDNY) (JSR). On the same day, the Court entered the SEC's Notice of Dismissal as to S2 Capital Management, LP. The SEC filed its action on October 16, 2009, which alleged that Raj Rajaratnam, Galleon Management, LP, Fortuna, S2 Capital, and others engaged in a widespread insider trading scheme involving hedge funds, industry professionals, and corporate insiders. At the time of the alleged conduct, Fortuna resided in Westwood, Massachusetts. Fortuna was a co-founder and principal of S2 Capital, which was an unregistered hedge fund investment adviser based in New York, New York. S2 Capital served as the investment adviser to the hedge fund S2 Capital Fund, LP. During the relevant time period, S2 Capital had over $125 million in assets under management. The Commission alleged that Fortuna and S2 Capital violated the federal securities laws by trading on the basis of material nonpublic information concerning quarterly earnings of Akamai Technologies, Inc. and concerning Advanced Micro Devices Inc.'s pending transactions with two Abu Dhabi sovereign entities. Fortuna and S2 Capital learned the inside information from Danielle Chiesi, a consultant and portfolio manager at New Castle Funds LLC, then a registered investment adviser based in White Plains, New York. Specifically, in July 2008, an Akamai executive tipped Chiesi about Akamai's disappointing earnings for its 2008 second quarter. Chiesi tipped others, including Fortuna, who traded based on that information on behalf of S2 Capital. Similarly, in October 2008, executives at IBM and AMD provided Chiesi with information concerning AMD's pending transactions with the Abu Dhabi entities. Chiesi tipped others, including Fortuna, who traded based on that information on behalf of S2 Capital. The Final Judgment permanently enjoins Fortuna from violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5; and (2) orders him liable for disgorgement of $193,536, prejudgment interest thereon in the amount of $11,040, and a civil penalty in the amount of $96,768. Fortuna separately pleaded guilty in a parallel criminal case before the United States District Court of the Southern District of New York, titled United States v. Fortuna, 09 Cr. 01003 (SDNY), and has been cooperating in connection with this action and related investigations. The SEC dismissed its case against S2 Capital, an entity which has ceased operations and is essentially defunct. In addition, since the case was filed the SEC has: obtained a final judgment by default as to Deep Shah, permanently enjoining Shah from violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and ordering him liable for over $34.5 million comprised of (a) disgorgement of ill-gotten gains of $8,201,464.96, representing Shah's ill-gotten gains and those of his downstream tippees, (b) prejudgment interest thereon in the amount of $1,755,865.09, and (c) a civil penalty in the amount of $24,604,394.88. entered into a settlement with Chiesi, pursuant to which Chiesi is permanently enjoined from violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act of 1933 ("Securities Act"); and is liable for disgorgement of ill-gotten gains of $500,000, together with prejudgment interest of $40,534.90, for a total of $540,534.90. entered into a settlement with David Plate, a proprietary trader at broker/dealer Schottenfeld Group, LLC. Pursuant to that settlement, Plate is permanently enjoined from violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and is liable for disgorgement of $43,876.37, plus prejudgment interest of $9,415.54. The judgment further provides that the Court later will determine issues relating to a civil penalty. Plate has agreed to cooperate with the SEC in connection with this action and related investigations. entered into a settlement with Gautham Shankar, a proprietary trader at Schottenfeld. Pursuant to that settlement, Shankar is permanently enjoined from violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5; and is liable for disgorgement of $243,105.59, plus prejudgment interest of $34,462.35. The judgment further provides that the Court later will determine issues relating to a civil penalty. Shankar has agreed to cooperate with the SEC in connection with this action and related investigations. entered into a settlement with Ali Hariri, an Atheros Communications, Inc. executive. Pursuant to that settlement, Hariri is permanently enjoined from violations of Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act; and is permanently barred him from acting as an officer or director of any public company. Hariri also is liable for disgorgement of ill-gotten gains, together with prejudgment interest, for a total of $2,665.68. entered into a settlement with Robert Moffat, Senior Vice President and Group Executive of IBM's Systems and Technology Group. Pursuant to that settlement, Moffat is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5, and barred from acting as an officer or director of any public company. entered into a settlement with Mark Kurland, Chief Executive Officer of New Castle Funds LLC. Pursuant to that settlement, Kurland is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act. Kurland is also liable for disgorgement of $4,213,630.18, representing profits made and/or losses avoided as a result of the unlawful trading alleged to have occurred at New Castle, together with prejudgment interest thereon in the amount of $204,553.59, for a total of $4,418,183.77. dismissed its claims against New Castle, which is no longer operating as an investment advisor and has filed Form ADV-W with the Commission, withdrawing its registration as an investment advisor. New Castle has agreed to cooperate with the Commission's staff and has represented that, as a condition of the dismissal of the Commission's action against it, it will not engage in further operations. entered into a settlement with Rajiv Goel, a former managing director in the treasury group of Intel Corp., as well as the Director of Strategic Investments at Intel Capital, an Intel subsidiary that makes proprietary equity investments in technology companies. Pursuant to that settlement, Goel is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act. Goel is also required to pay disgorgement in the amount of $230,570.52, plus prejudgment interest in the amount of $23,447.21, for a total of $254,017.73. The Court will determine at a later date whether any civil penalty is appropriate as to Goel. Goel is barred from acting as an officer or director of any public company. Goel has agreed to cooperate with the SEC in connection with this action and related investigations. entered into a settlement with Roomy Khan, an individual investor who had been employed at Intel in the late 1990s and had been subsequently employed at Galleon, pursuant to which Khan is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, and is required to pay disgorgement in the amount of $1,552,566.94, plus prejudgment interest in the amount of $304,398.77, for a total of $1,856,965.71. The Court will determine at a later date whether any civil penalty is appropriate as to Khan. Khan has agreed to cooperate with the SEC in connection with this action and related investigations. entered into a settlement with Anil Kumar, a former director at the global consulting firm McKinsey & Co., pursuant to which Kumar is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, and is required to pay disgorgement in the amount of $2.6 million, plus prejudgment interest in the amount of $190,621, for a total of $2,790,621. The Court will determine at a later date whether any civil penalty is appropriate as to Kumar. Kumar has agreed to cooperate with the SEC in connection with this action and related investigations. entered into a settlement with Schottenfeld Group, LLC, a New York limited liability company and registered broker-dealer, pursuant to which Schottenfeld is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, and is required to pay disgorgement in the amount of $460,475.28, plus prejudgment interest in the amount of $72,202.72, and a civil penalty of $230,237.64, representing fifty percent of the disgorgement amount, a discount from a one-time penalty in recognition of its agreement to cooperate. Schottenfeld also agreed to implement enhanced policies and procedures to prevent future securities laws violations, as well as to retain an independent consultant to review its policies and procedures. entered into settlements with Choo-Beng Lee and Ali T. Far, who were both managing members of Far & Lee LLC, a Delaware limited liability company. In addition, Lee was president and Far a managing member of Spherix Capital LLC, an unregistered hedge fund investment adviser based in San Jose, California. Pursuant to the settlements, Lee and Far are permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, and are required, jointly and severally, to pay disgorgement in the amount of $1,335,618.17, plus prejudgment interest in the amount of $96,385.52, and a civil penalty of $667,809.09, representing fifty percent of the disgorgement amount, a discount from a one-time penalty in recognition of their cooperation. dismissed its claims against Far & Lee and Spherix, which are now defunct or nearly so, in exchange for their agreement to cooperate and cease doing business.”

SEC GETS JUDGMENTS IN CHINA VOICE HOLDINGS CORP. ALLEGED PONZI SCHEME

October 4, 2011 The following excerpt is from the SEC website: “On October 4, 2011, the Securities and Exchange Commission announced that the Honorable Reed O’Connor, United States District Judge for the Northern District of Texas, recently entered orders permanently enjoining multiple defendants in a case involving the co-founder of China Voice Holding Corp. Without admitting or denying the allegations in the Commission’s complaint, Alex Dowlatshahi and Christopher Mills consented to the entry of judgments that permanently enjoin them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, companies owned and controlled by Dowlatshahi and Mills, including Defendants Integrity Driven Network Corp., Lucrative Enterprises Corp., Synergetic Solutions LLC, Silver Summit Holdings LLC, and Sleeping Bear LLC, were permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgments also provide that upon motion of the Commission, the Court may order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The judgments were entered on August 31, 2011, and September 19, 2011. On September 23, 2011, Defendant Ilya Drapkin was permanently enjoined from violating Section 17(a)(3) of the Securities Act. In addition the judgment permanently bars Drapkin from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. Drapkin’s companies, Defendants MG TK Corp. and SMI Chips, Inc., also shall be ordered to pay disgorgement of ill-gotten gains and prejudgment interest in amounts the Court deems appropriate upon motion of the Commission. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint. On September 26, 2011, Defendant Gerald Patera, and his companies, Defendants Capital Bankers Group Ltd. and Third Securities Corp., were permanently enjoined from violating Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. In addition, the judgment permanently bars Patera from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint. The Commission filed an emergency action on April 28, 2011, alleging that China Voice’s co-founder and former Chief Financial Officer, David Ronald Allen, with the assistance Dowlatshahi and Mills, and numerous related entities, launched what became a Ponzi scheme that sought to raise at least $8.6 million from investors across the country. The Commission alleged that, contrary to what investors were told, proceeds were used to pay back earlier investors; to make payments to Allen, Dowlatshahi, and Mills; and to make payments to Allen-affiliated business, including China Voice. On June 5, the Honorable Judge Reed O’Connor, United States District Judge, entered a preliminary injunction, which, along with freezing the assets of multiple defendants and relief defendants, prevents the defendants from violating certain provisions of the securities laws, orders the preservation of documents, and requires the defendants to provide an accounting to determine the disposition of investor funds. The SEC’s complaint also charges China Voice, its former chairman and CEO William Burbank IV, and Allen for a series of fraudulent statements about China Voice’s financial condition and business prospects, as well as Patera, Drapkin, and Robert Wilson for their roles in the scheme. The Commission’s case is still pending against remaining defendants Allen, Burbank, Wilson, China Voice, and various of their related entities.”

PHONY DOCUMENTS LEAD TO SEC CHARGES

The following is an excerpt from the SEC website: “Washington, D.C., Sept. 28, 2011 – The Securities and Exchange Commission today charged a San Francisco-area investment adviser with fraud for lying to clients about how brokerage commission rebates were being used and producing phony documents to cover up the fraud during an SEC examination. The SEC alleges that Kurt Hovan misappropriated more than $178,000 in “soft dollars” that he falsely claimed to be using to pay for legitimate investment research on his clients’ behalf. In reality, Hovan was secretly funneling the money for such undisclosed uses as office rent, computer hardware, and his brother’s salary. When SEC examination staff asked Hovan to provide documentation to back up his claims, he created phony research reports. The SEC also charged his wife Lisa Hovan and his brother Edward Hovan for their roles in the fraudulent scheme at Hovan Capital Management (HCM). Soft dollars are credits or rebates from brokerage firms on commissions paid by clients for trades executed in the client accounts of an investment adviser. If appropriately disclosed, an investment adviser may retain the soft dollar credits to pay for a limited category of brokerage and research services that benefit clients. According to the SEC’s complaint filed in federal court in San Francisco, Kurt and Lisa Hovan falsely disclosed to clients that HCM would use soft dollars only for certain research services. Instead, they used $166,667 in soft dollars to pay Edward Hovan’s salary over a 10-month period in 2008 and 2009. To cover up these payments, the three Hovans created a shell company – “Bolton Research” – secretly controlled by Edward Hovan. Through this company, the Hovans invoiced HCM’s brokerage firms for research services that had never been rendered. Once Edward Hovan received the payments, he kicked back approximately 40 percent ($65,000) to Kurt and Lisa Hovan to pay the office rent. The SEC further alleges that Kurt and Lisa Hovan instructed a research provider paid with soft dollars to pad its invoices by $12,000 and kick back this amount to help HCM pay for a new computer server. During a January 2010 examination of HCM, the SEC staff asked HCM to provide copies of the research reports prepared by Bolton Research in exchange for the soft dollar payments. In response, Kurt Hovan quickly drafted numerous research reports and doctored materials to make them appear as if they had been prepared by Bolton. Hovan provided these phony documents to SEC examiners. The SEC’s complaint charges Kurt Hovan with violating Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5, Sections 206(1), 206(2), and 207 of the Investment Advisers Act of 1940 (“Advisers Act”), Section 17(e)(1) of the Investment Company Act of 1940 (“Investment Company Act”), and aiding and abetting violations of Section 204(a) of the Advisers Act and Rule 204-2(a)(7). The SEC’s complaint charges Lisa Hovan with violating Section 10(b) of the Exchange Act and Rule 10b-5, Section 207 of the Advisers Act, and aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5 and 206(1) and 206(2) of the Advisers Act. The SEC’s complaint charges Edward Hovan with violating Section 10(b) of the Exchange Act and Rule 10b-5 and Section 17(e)(1) of the Investment Company Act, and aiding and abetting violations of Sections 206(1) and 206(2) of the Advisers Act. The SEC’s complaint charges HCM with violating Section 10(b) of the Exchange Act and Rule 10b-5, Sections 204(a), 206(1), 206(2), and 207 of the Advisers Act, and Section 17(e)(1) of the Investment Company Act. The complaint seeks injunctive relief, disgorgement with prejudgment interest, and financial penalties. The SEC’s case was investigated by Karen Kreuzkamp and Robert S. Leach of the San Francisco Regional Office. The examination of HCM was conducted by Karah To, Tracey A. Bonner, and Ada C. Chee of the San Francisco Regional Office’s investment adviser/investment company examination program. The U.S. Attorney’s Office for the Northern District of California today filed criminal charges against Kurt Hovan. The Commission would like to thank the U.S. Attorney’s Office for the Northern District of California and the Federal Bureau of Investigation for their assistance in this matter.”

UNREGISTERED ADVISOR CHARGED WITH FRAUD

The following excerpt is from the SEC website: September 27, 2011 “On September 27, 2011, the Securities and Exchange Commission filed a civil injunctive action against Shreyans Desai and ShreySiddh Capital, LLC (SSC) in the United States District Court for the District of New Jersey. The Commission's complaint alleges fraudulent conduct by Desai in connection with the purchase and sale of securities for individuals who provided Desai with more than $245,000 to invest on their behalf. According to the complaint, from April 2009 to February 2011, Desai, acting through SSC, an unregistered investment adviser founded by Desai, made numerous materially false and misleading statements to potential investors, including that SSC was a securities broker registered with the Commission and that potential investors would receive returns of at least 50% if they invested their money with SSC. Desai also guaranteed to investors that he would not lose their money. On the basis of Desai's misrepresentations, five individuals gave Desai money to invest on their behalf through SSC. Desai then misappropriated investor money, using it to, among other things, make donations to a local religious institution and pay the personal debts and expenses of Desai's family members. Desai also lost investor money through bad trades. To hide the fact that Desai had misappropriated or lost investor money, Desai provided SSC investors with account statements that overstated the value of the investors' accounts by as much as 300%. According to the Commission's complaint, Desai and SSC also acted as securities brokers by engaging in the regular business of effecting transactions in securities for the accounts of others and by holding themselves out as securities brokers that were registered with the Commission. At the time, however, neither Desai nor SSC was registered with the Commission as a broker and neither was associated with a registered broker-dealer. The Commission's complaint charges Desai and SSC with violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) 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. The Commission is seeking permanent injunctive relief, civil penalties and disgorgement against Desai and SSC.”

CLAIMS OF A 6300% RETURN ON INVESTMENT MAY NOT BE TRUE ACCORDING TO THE SEC

The following is from the SEC website: September 23, 2011 “The Securities and Exchange Commission today charged two San Francisco-area men with fraud for offering investors extraordinary returns as high as 6,300 percent when instead their money was spent on multi-million dollar home improvements and other luxuries. The SEC alleges that Jason G. Rivera, Jr., Marc C. Harmon, and two companies controlled by Rivera raised nearly $8 million from investors in two separate schemes, one involving purported trading in gold and diamonds and the other involving purported trading in collateralized mortgage obligations (CMOs). However, the funds raised from investors weren’t used for those purposes as Rivera diverted most of the money for his personal exploits, including a $360,000 surprise birthday party for his wife. According to the SEC’s complaint filed in federal court in San Francisco, Rivera previously worked in real estate and portrayed himself to investors as a successful financier. He raised approximately $4.5 million from investors in 2007 and 2008 through his company, the Joseph Rene Corporation (JRC). He touted JRC as a route to “financial freedom” and “maximum results with minimum risk” in a brochure he distributed to investors, assuring them high returns by pooling investor money and placing it in “hard assets” such as real estate, oil, diamonds, and gold. However, as Rivera instead spent investor money as his own and was unable to make payments to investors as promised, he tried to placate them with falsehoods. For example, Rivera claimed in a June 2008 e-mail to JRC investors that glitches in the banking system had delayed their payouts, but “your money is still making money.” In a follow-up e-mail, he maintained that despite the worldwide financial downturn, JRC was “thriving,” had “lost NO money,” and all investor funds were “safe.” The SEC alleges that Rivera later teamed up with Harmon, an unemployed construction worker at the time who had no training or experience in selling or managing investment programs. Together they raised an additional $3.2 million from 2008 to 2010 through a second company, Executive Members Management Group (EMMG). Rivera and Harmon led investors to believe they could make rapid profits of up to 6,300 percent by investing in trading programs involving CMOs and other financial instruments. Specifically, Harmon falsely claimed that EMMG used “licensed traders” and “trading platforms,” and he falsely boasted to investors that extremely wealthy individuals had invested millions of dollars with EMMG. Harmon even lied to several investors about a phony trip he took to the United Kingdom in an effort to place their money in a trading program. In both schemes, the SEC alleges that Rivera used investor funds to afford such personal luxuries as several Mercedes Benz automobiles, jewelry, restaurant meals, and basketball season tickets. Rivera misused investor funds in the JRC scheme to pay for approximately $1.5 million in improvements to his 8,000-square foot home in Alamo, Calif. He later misused investor funds in the EMMG scheme to make $1.1 million in additional improvements to his home. Rivera also paid approximately $180,000 to Harmon. The complaint charges Rivera, Harmon, JRC, and EMMG with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint also charges Rivera with violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and Harmon with violating Section 15(a)(1) of the Exchange Act. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil monetary penalties.”

DODD-FRANK ON CONGO CONFLICT MINERALS ROUNDTABLE OCTOBER 18, 2011

The following is an excerpt from an SEC e-mail: “Washington, D.C., Sept. 29, 2011 — The Securities and Exchange Commission today announced that it will host a public roundtable next month to discuss the agency’s required rulemaking under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which relates to reporting requirements regarding conflict minerals originating in the Democratic Republic of the Congo and adjoining countries. The event will take place on October 18 from 12:30 p.m. to 5:15 p.m. and will provide a forum for various stakeholders to exchange views and provide input on issues related to the SEC’s required rulemaking. The panel discussions will focus on key regulatory issues such as appropriate reporting approaches for the final rule, challenges in tracking conflict minerals through the supply chain, and workable due diligence and other requirements related to the rulemaking. “We are committed to writing an effective rule as soon as possible, and the roundtable will help us do that,” said Meredith Cross, Director of the SEC’s Division of Corporation Finance. Roundtable panelists are expected to reflect the views of different constituencies, including affected issuers, human rights organizations, and other stakeholders. A final agenda including a list of participants will be announced closer to the date of the roundtable. The roundtable will be held in the auditorium at the SEC’s headquarters at 100 F Street NE in Washington D.C. The roundtable will be open to the public with seating on a first-come, first-served basis, and the discussion also can be viewed via live webcast on the SEC website.”