INVESTMENT ADVISOR TO PAY FOR FRAUDULENT MISREPRESENTATIONS

The following is an excerpt from the SEC website: September 29, 2011 ‘The Securities and Exchange Commission announced today that, on September 21, 2011, the United States District Court for the Eastern District of Pennsylvania entered a judgment against Defendant Alfred Clay Ludlum, III in the matter captioned Securities and Exchange Commission v. Alfred Clay Ludlum, III, et al., Civil Action No.10-cv-7379 (E.D. Pa.). Ludlum is the founder, president, chief compliance officer, and sole individual in control of Printz Capital Management, LLC (Printz Capital), which was registered with the Commission as an investment adviser from September 19, 2006 until its registration was revoked on June 27, 2011. Ludlum also wholly controls Printz Financial Group, Inc. and PCM Global Holdings LLC (together with Printz Capital, the Printz Entities). In a civil action filed on December 20, 2010, the Commission alleged that Ludlum and the Printz Entities made fraudulent misrepresentations and material omissions to investors, including Printz Capital advisory clients, concerning unregistered offerings of equity and debt securities in the Printz Entities. These investors were told that their funds would be used for working capital and to grow and operate the businesses of the Printz Entities when, in fact, Ludlum used most of these funds to support lifestyle, pay his personal expenses, and repay other investors. The Commission also alleged that Ludlum fraudulently obtained loans from one advisory client and made unauthorized transfers of funds belonging to three advisory clients to accounts that he controlled. The complaint further alleged that Ludlum failed to register the securities offerings in the Printz Entities with the Commission, even though no exemption from registration applied, and that Printz Capital, aided and abetted by Ludlum, violated additional provisions governing investment advisers. To settle the SEC’s charges, Ludlum, without admitting or denying the allegations of the complaint, except as to jurisdiction, consented to the entry of a judgment that: (i) permanently enjoins him from violating Sections 5 and 17(a) of the Securities Act of 1933 (the Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of Investment Advisers Act of 1940 (the Advisers Act), and from aiding and abetting any violations of Sections 203, 204, and 207 of the Advisers Act; and (ii) provides that Ludlum will be ordered to pay disgorgement, prejudgment interest, and penalties in amounts to be determined by the court, upon motion by the Commission. Based on the entry of these injunctions, on September 29, 2011 the SEC issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940 and Notice of Hearing against Ludlum. Previously in this matter, a final judgment was entered by default against the Printz Entities on March 15, 2011,, which permanently enjoined them from violating Sections 5 and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, permanently enjoined Printz Capital from violating Sections 206(1), 206(2), 203A, 204, and 207 of the Advisers Act, and permanently enjoined Printz Financial Group, Inc. from violating Securities Act Rule 503(a) of Regulation D. Pursuant to the final judgment, the Printz Entities were ordered to pay, jointly and severally, $735,617 in disgorgement, $49,817 in prejudgment interest, and a civil penalty of $735,617. No part of this judgment has been paid to date. The Commission subsequently instituted administrative proceedings against Printz Capital pursuant to Section 203(e) of the Advisers Act, and Printz Capital consented to the issuance of an order on June 27, 2011 revoking its registration with the Commission as an investment adviser.”

INVESTMENT ADVISOR CHARGED WITH SELLING PIPE DREAMS

The following excerpt is from the SEC website: “Washington, D.C., Sept. 28, 2011 — The Securities and Exchange Commission today charged a Long Island-based investment adviser with defrauding investors in hedge funds investing in PIPE transactions and misappropriating more than $1 million in client assets for his personal use. The SEC alleges that Corey Ribotsky and his firm The NIR Group LLC repeatedly lied to investors to hide the truth that his PIPE investment and trading strategy was failing during the financial crisis. For example, Ribotsky falsely told investors that despite the adverse market conditions he could liquidate all of the PIPE investments in 36 to 48 months — a practical impossibility given the size of the investments. Meanwhile, Ribotsky misused investor money by writing checks to pay for personal services and such luxury items as a Lexus, Mercedes, and Rolex watch. “In a classic betrayal of trust, Ribotsky stole from his investors and falsely assured them that his struggling hedge funds were thriving,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This enforcement action reflects our continuing commitment to bring to justice individuals and companies that committed fraud during the credit crisis.” A “PIPE” transaction involves “private investment in public equity.” Microcap public companies often engage in PIPE transactions to raise capital. According to the SEC’s complaint filed in federal district court in Brooklyn, N.Y., NIR’s family of AJW Funds provided cash financing to distressed, emerging growth, and start-up microcap companies quoted on the Over-the-Counter Bulletin Board or the Pink Sheets. The AJW Funds were typically invested in 120 to 130 different companies at any given time. The SEC alleges that beginning in July 2004, Ribotsky began siphoning assets from one of the AJW Funds he was managing through NIR. Ribotsky typically wrote checks to himself or to “cash” and then instructed NIR office employees to cash the checks at a nearby bank. They would then give Ribotsky the money. Although Ribotsky was warned by NIR’s head accountant that he could not lawfully take this money for himself, Ribotsky continued to do so anyway for the next five years. According to the SEC’s complaint, NIR’s strategy of investing in distressed and start-up companies began to show signs of failure by mid-to-late 2007. Many of the distressed companies to which the AJW Funds had made loans were by then essentially defunct or on the verge of filing for bankruptcy. The SEC alleges that Ribotsky made false and misleading statements to investors while his hedge funds were struggling to create the illusion of success. For instance, an NIR employee — who also is charged in the SEC’s complaint — prepared an investor chart accurately showing that NIR had invested a total of $31.4 million in 57 deals for the relevant period. When Ribotsky reviewed the chart, he told the employee that “investors can’t see this” and instructed him to “change the number to something near $60 million” before sending it to investors so they would falsely see an average investment of at least $1 million per deal. Ribotsky continued to make false and misleading statements to investors even after the AJW Funds’ outside auditor had calculated that it would take decades — if possible at all — to liquidate all of the AJW Funds’ PIPE investments under NIR’s stated investment and trading strategy. The SEC further alleges that Ribotsky used money from one group of investors to pay another group of investors in 2007 without adequately disclosing this to any of the investors. Ribotsky’s misconduct also included his failure to conduct any meaningful due diligence before selling a third party $43.2 million of AJW Funds assets in November and December 2008 — a transaction that allowed Ribotsky to book a purported “realized” gain at a critical time without his funds actually receiving any money. NIR’s offering materials and investor communications touted that NIR engages in extensive due diligence reviews before making investment decisions on behalf of the AJW Funds. The third-party purchaser soon defaulted on his payment obligations and has never paid for any of the assets. The SEC’s complaint charges Ribotsky and NIR with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint seeks a final judgment permanently enjoining Ribotsky and NIR from future violations of the above provisions of the federal securities laws and ordering them to disgorge any ill-gotten gains plus prejudgment interest and pay monetary penalties.”

SEC GETS EMERGENCY COURT ORDER HALTING AN ALLEGED PONZI SCHEME

The following excerpt is from the SEC website: "Washington, D.C., Oct. 6, 2011 – The Securities and Exchange Commission announced that it obtained an emergency court order today to halt a Ponzi scheme that promised investors rich returns on water-filtering natural stone pavers, but bilked them of approximately $26 million over a four-year period. The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, alleges that convicted felon Eric Aronson and others defrauded investors in PermaPave Companies, a group of firms based on Long Island, N.Y., and controlled by Aronson. About 140 individuals, many working in the construction or landscaping business, invested in the scheme between 2006 and 2010, the SEC alleged. Investors were told that PermaPave Companies had a tremendous backlog of orders for pavers imported from Australia, which could be sold in the U.S. at a substantial mark-up, yielding monthly returns to investors of 7.8% to 33%. In reality, the complaint states that there was little demand for the product, and the cost of the pavers far exceeded the revenue from sales. Lacking the profits promised to investors, Aronson and two other PermaPave Companies executives, Vincent Buonauro Jr., and Robert Kondratick, used new investments to make payments to earlier investors and then siphoned off much of the rest for themselves, buying luxury cars, gambling trips to Las Vegas, and jewelry. In addition, the complaint alleges that Aronson used investors’ money to make court-ordered restitution payments to victims of a previous scheme to which he pleaded guilty to conducting in 2000. “Aronson and his associates operated the PermaPave Companies as a classic Ponzi scheme,” said George S. Canellos, Director of the New York Regional Office. “They created the façade of a profitable business, promised investors extraordinary rates of return, and used much of their investors’ money to fund their own lavish lifestyle.” The U.S. Attorney’s Office for the Eastern District of New York, which conducted a parallel investigation of the matter, today filed criminal charges against Aronson, Buonauro, and Kondratick, who were arrested earlier today. According to the SEC’s complaint, when investors began demanding money owed to them, Aronson accused them of committing a felony by lending the PermaPave Companies money at the interest rates he promised them, which he suddenly claimed were usurious. Aronson and his attorney, Fredric Aaron, then allegedly made false statements to persuade investors to convert their securities into ones that deferred payments owed them for several years. The SEC also alleges that the defendants used some of the money raised through the Ponzi scheme to purchase a publicly traded company, Interlink-US-Network, Ltd. Several months later, the SEC said Interlink issued a Form 8-K, signed by Kondratick, which falsely stated that LED Capital Corp. had agreed to invest $6 million in Interlink. According to the complaint, LED Capital Corp. did not have $6 million and had no dealings, let alone any agreements, with Interlink. U.S. District Court Judge Jed S. Rakoff granted the SEC’s request to freeze assets of the defendants and eight relief defendants. The SEC is seeking preliminary and permanent injunctions against the defendants, and to have them return their allegedly illicit profits with prejudgment interest, and pay civil monetary penalties. In addition, the SEC seeks to bar Aronson, Kondratick, and Aaron from participating in penny-stock offerings and from serving as officers or directors of public companies. The SEC’s complaint charges Aronson, Kondratick, Buonauro, the PermaPave Companies, and Interlink with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and charges Aaron with aiding and abetting the Section 10(b) and Rule 10b-5 violations. The complaint charges Interlink with violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder, and charges Aronson, Kondratick, and Aaron with aiding and abetting these violations. The complaint also asserts violations of Section 5(a) and 5(c) of the Securities Act as to Aronson, Buonauro, and the PermaPave Companies and violations of Section 15(a) of the Exchange Act as to Aronson and Buonauro. The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Securities Fraud Squad of Federal Bureau of Investigation in connection with this matter. Celeste Chase, Daniel Michael, and Desiree M.C. Marmita, conducted the SEC’s investigation; Howard Fischer of the SEC’s New York Regional Office will lead the litigation."

TREASURY SECRETARY TIM GEITNER TESTIMONY TO FINANCIAL STABILITY OVERSIGHT COUNCIL

The following excerpt is from the U.S. Department of Treasury website: ​Treasury Secretary Timothy F. Geithner Testimony before the Committee on Banking, Housing, and Urban Affairs 10/6/2011 Page Content Chairman Johnson, Ranking Member Shelby, and members of the Committee, thank you for inviting me to testify today on behalf of the Financial Stability Oversight Council (the “Council”). In setting up this Council, you asked us to provide in a public, annual report a comprehensive view of financial market developments and potential threats to our financial system. My testimony today will review the conclusions and recommendations made by the Council in its first annual report, which is being submitted in full alongside this testimony. In 2011, the world economy is still healing from the devastating effects of the financial crisis. On top of those challenges, we experienced a series of additional shocks early this year, including high oil prices and the disaster in Japan. Europe’s protracted economic and financial crisis has added to these pressures on global growth. And the destructive debate surrounding the debt limit this summer has damaged the confidence of American businesses and consumers. Some of these factors have eased in recent months, as oil prices have fallen and Japan has begun to recover. But the cumulative effect of the pressures has resulted in slower growth in the United States and around the world, with lowered expectations for growth next year. The crisis in Europe presents a significant risk to global recovery. We are working closely alongside the IMF to encourage European leaders to move more forcefully to put in place a comprehensive strategy to stabilize the situation. The critical imperative is to ensure that the governments and the financial systems under pressure have access to a more powerful financial backstop, conditioned on policy actions that credibly address the underlying causes of concern for a sustained period of time. In the face of the situation in Europe, and the general slowdown across the world, the most important thing we can do is take strong steps to strengthen our economy at home. The most effective strategy for doing that is to enact steps now that will accelerate economic growth, tied to long term reforms to restore fiscal sustainability. The American Jobs Act provides a substantial package of tax cuts and investment that, according to estimates by outside economists, would raise economic growth by one to two percentage points and help create one to two million new jobs. And in the President’s proposal to the Joint Committee of Congress charged with reducing our long-term deficits, we outlined a comprehensive package of reforms to spending programs and the tax system that would bring our deficits down to the level where our overall debt burden starts to decline as a share of our economy. The Council is composed of each of the agencies responsible for oversight of the financial system and the firms and markets that comprise it. In the judgment of this Council, the United States financial system is in a significantly stronger position and better able to withstand the new risks we face in the global economy. Because of the actions we have taken to repair and reform our system: The weakest parts in our financial system—the entities that took the most risk—no longer exist or have been significantly restructured. The firms that survived are better capitalized—large banks have increased common equity by over $300 billion since the beginning of 2009. And the level of common equity to risk weighted assets across these banks is now approximately 10 percent, up from six percent at the beginning of 2009. Banks are funding themselves more conservatively and are maintaining much larger cushions of safe and liquid financial assets. Debt maturing in one year or less at the largest institutions, as a share of total liabilities, has declined dramatically to roughly 40 percent of the pre-crisis level. The major banks have reduced the size and overall risk in their balance sheets, resulting in a substantial decrease in leverage—a major source of risk—compared to pre-crisis levels. The “shadow banking system”—the financial firms that operate outside of a framework of oversight and prudential regulation—is much smaller, with assets at roughly half the level of 2007. These improvements are very significant. Together they represent more progress on the path to a more stable and resilient financial system than has been achieved in the other major economies. The European financial crisis has placed significant pressure on its financial institutions and slowed growth significantly in Europe and around the world. U.S. financial institutions, including our major banks and money market funds have substantially reduced their exposure to the economies of Europe that are under the most pressure. Our direct financial exposure to those governments and their financial institutions is quite small, but Europe is so large and so closely integrated with the U.S. and world economies that a severe crisis in Europe could cause significant damage by undermining confidence and weakening demand. This makes it even more important that Congress act to strengthen growth now and put our fiscal position on a more sustainable path. Economic and financial developments since the release of the Council’s report reinforce the importance of its recommendations. Here are those recommendations in summary form. First, the Council emphasizes the importance of further actions to strengthen the financial position of the core of the U.S. financial system, particularly the largest institutions. We want the largest institutions to manage their businesses so that they have the ability to weather more challenging future environments without government assistance in crisis. Toward this objective, regulators will gradually phase in, over a period of several years, the much tougher standards for capital and liquidity we have negotiated with the other major financial systems around the world. These efforts focused on the largest banks are complemented by recommendations designed to make other key market participants more resilient to future challenges to growth and financial stability. And the report draws attention to new market structures and financial products, such as exchange traded funds and structured notes, where we have seen very rapid growth and innovation. A robust financial system should encourage and foster innovation, but not at the expense of overall financial stability. Second, the Council recommends reforms to strengthen a number of key funding markets in the United States, markets that were a critical source of vulnerability in the crisis. The most important of these recommendations are directed at the tri-party repo markets and the money market funds. The essence of these recommendations is to make the tri-party repo markets and money funds themselves less vulnerable to the classic dynamic in which an abrupt rush for the exits forces a damaging spiral of asset sales, deleveraging and broader contagion. Substantial progress has been made toward this objective, but we have more work to do. Third, the Council recommends reforms to the housing finance system. In this context, it recommends action to establish national standards for the mortgage servicing market, in order to better align incentives and help reestablish confidence in the integrity of the housing market. And the Council emphasizes the importance of broader reforms to help return private capital to the housing market, strengthen mortgage underwriting, and reduce over time the role of the government in the housing markets. As we proceed with these reforms, we want to make sure that we are encouraging, not undermining, the prospects for broader recovery in the housing market. Fourth, the Council emphasizes the importance of closer cooperation and coordination in the implementation of financial reforms, both here in the United States and around the world. This is crucial because if we allow large gaps to emerge as we did in the years before the crisis, risk will migrate to those gaps, leaving the system as a whole more vulnerable to another crisis. Differences in the design of standards in particular areas create opportunities for firms and investors to take advantage of those weaker standards. As we act to contain risk in the United States, we want to minimize the chances that it simply moves to other markets around the world, ultimately endangering our own system. The most important challenges we face in building a level playing field lie in the design of new capital standards and liquidity rules for the largest institutions and reforms to the derivatives markets. The Council’s recommendations are designed to address the challenges we see today, but also those inherent in a dynamic, innovative financial system. We cannot predict the precise threats that may face the financial system. The best way to prepare for this uncertainty is to continue to build the shock absorbers and safeguards that improve the resilience of the financial system. We need to recognize that policy and regulation will often be behind the curve of financial innovation. The best course is to plan for constant change and the potential for instability and to recognize that the threats will come in ways we cannot predict or fully understand. Although our financial system today is much stronger than it was before the crisis, our work is not complete. To preserve the gains we have achieved and to reduce both the risk of and the damage from future crises, we must continue to implement financial reform, pass comprehensive housing finance reform, and move forward with the other recommendations of the Council. We will do this with a balanced approach, weighing the benefits of regulation against the costs of excessive restraint. We need to move at a pace that fully recognizes the fragility of the global economic recovery, phasing in reforms over time so that we limit the risks to growth. As we move forward, I encourage Congress to strengthen our capacity to continue repairing our financial system and to make sure that investors and consumers are afforded better protections against abuses and unfair practices. This means making sure that qualified people are in place to run the financial agencies. And it requires that Congress provide sufficient funding for enforcement agencies to do their jobs in today’s complicated and challenging financial environment. If we leave the agencies responsible for enforcement underfinanced, then we will leave the American consumers, investors, and businesses that depend on our financial system more vulnerable. In closing, I want to thank the other members of the Financial Stability Oversight Council, as well as the Council’s staff, for the work they have done over the past year and their efforts to produce this annual report. We look forward to working with this Committee, and with Congress as a whole, to build on the substantial progress we have made to create a stronger financial system. "

FIRM AND TOP MANAGEMENT CHARGED BY SEC FOR VIOLATING ANTI-FRAUD PROVISIONS OF THE SECURITIES LAWS

The following is an excerpt from the SEC website: “On October 4, 2011, the Securities and Exchange Commission (SEC) filed a complaint in United States District Court for the Northern District of New York charging StratoComm Corporation, its CEO Roger D. Shearer, and its former Director of Investor Relations, Craig Danzig, with violating the antifraud provisions of the securities laws and with illegally selling securities in unregistered transactions. On October 3, 2011, the SEC filed a complaint in United States District Court for the Southern District of Florida alleging that attorney Stewart A. Merkin, StratoComm’s outside counsel, also committed securities fraud. The SEC’s complaint filed in Albany, New York alleges that StratoComm, acting at Shearer’s direction and with Danzig’s assistance, issued and distributed public statements falsely portraying the company as actively engaged in the manufacture and sale of telecommunications systems for use in underdeveloped countries, particularly Africa. In reality, the company had no product and no revenue. The SEC’s complaint also alleges that StratoComm, Shearer and Danzig sold investors approximately $3 million worth of StratoComm stock in unregistered transactions. Shearer used much of that money for his own purposes, including paying a substantial part of the restitution he owed in connection with his guilty plea in a prior criminal proceeding. The SEC’s complaint charges StratoComm with violations of 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 and Rule 10b-5 thereunder. It charges Shearer with violating Sections 5(a) and 5(c) of the Securities Act, aiding and abetting StratoComm’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and with being liable as a control person for StratoComm’s violations. The SEC’s complaint charges Danzig with violating Sections 5(a), 5(c), and 17(a) of the Securities Act, with violating Section 15(a) of the Exchange Act, and with aiding and abetting StratoComm’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC’s complaint seeks permanent injunctions, disgorgement of unlawful proceeds plus prejudgment interest, and a financial penalty from all defendants. It also seeks an order prohibiting Shearer from serving as an officer or director of a public company and prohibiting Shearer and Danzig from participating in the offering of a penny stock. The SEC’s complaint filed in Miami, Florida alleges that Merkin wrote four attorney representation letters for posting on the website of Pink Sheets LLC and its successor, Pink OTC Markets, Inc. In those letters Merkin disclaimed knowledge of any investigation into possible violations of the securities laws by StratoComm or any of its officers or directors. However, the SEC’s complaint also alleges that Merkin was representing StratoComm and several individuals in connection with the SEC’s investigation at the time. Nevertheless, in order that StratoComm’s shares would continue to be quoted, the SEC’s complaint alleges that Merkin falsely stated that to his knowledge StatoComm was not under investigation. The SEC’s complaint charges Merkin with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. It seeks a permanent injunction, disgorgement of unlawful proceeds plus prejudgment interest, a financial penalty, and an order prohibiting Merkin from participating in the offering of a penny stock.”

SEC GETS ASSETS FROZEN AT QUANTITATIVE HEDGE FUND

The following is an excerpt from the SEC website: “Washington, D.C., Oct. 26, 2011 — The Securities and Exchange Commission today obtained an asset freeze against a Boston-area money manager and his investment advisory firm charged with misleading investors in a supposed quantitative hedge fund and diverting portions of investor money into his personal bank account. The SEC alleges that Andrey C. Hicks and Locust Offshore Management LLC made false representations to create an aura of legitimacy when soliciting individuals to invest in a purported billion dollar hedge fund that Hicks controlled called Locust Offshore Fund Ltd. Hicks raised at least $1.7 million from several investors for the hedge fund. Among the false claims made to investors were that Hicks obtained undergraduate and graduate degrees at Harvard University, and that he previously worked for Barclays Capital, and that the hedge fund held more than $1.2 billion in assets. “Hicks lied to investors about virtually every aspect of his fictitious hedge fund. This brazen web of lies to investors constituted an outright fraud,” said David P. Bergers, Director of the SEC’s Boston Regional Office. “Hicks and Locust Offshore Management created this intricate scheme in order to gain credibility with investors,” said Robert Kaplan, Co-Chief of the Asset Management Unit in the SEC’s Division of Enforcement. “Even hedge fund managers who claim affiliations with well-known institutions should be thoroughly researched before making an investment.” At the SEC’s request, Judge Richard Stearns of the U.S. District Court in Massachusetts issued a temporary restraining order that freezes the assets of Hicks, his firm, and the hedge fund. According to the SEC’s complaint, Hicks and his firm falsely claimed that the firm’s quantitative strategies were based on mathematical models that Hicks developed while at Harvard, where he purportedly received his undergraduate degree in 2005 and a graduate degree in 2007. Unbeknownst to investors, Hicks only attended Harvard’s undergraduate college for three semesters and never graduated after twice being required to withdraw for failing to perform academically. Hicks only took one mathematics course during his time at Harvard, receiving a D- for a grade. The SEC alleges that Hicks and his firm misrepresented in offering materials to potential investors that while purportedly at Barclays Capital, Hicks “grew his book nearly two-fold and expanded his group’s assets under management to roughly $16 [billion].” According to a search of records at Barclays Capital, the firm has no record of employing Hicks. According to the SEC’s complaint, Hicks and his firm also falsely claimed that Ernst & Young served as the fund’s auditor, Credit Suisse served as the fund’s prime broker and custodian, and the fund was a business company incorporated under the laws of the British Virgin Islands. The SEC’s complaint charges Hicks and Locust Offshore Management with violating 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 Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint also names the Locust Offshore Fund as a relief defendant, alleging that it received investor funds to which it had no right. The SEC’s expedited investigation was conducted by Boston Regional Office staff including Michele T. Perillo and Kevin M. Kelcourse of the Asset Management Unit and Amy S. Gwiazda. Richard M. Harper II will lead the SEC’s litigation. The SEC acknowledges the assistance of the Swiss Financial Market Supervisory Authority and the British Virgin Islands Financial Services Commission. The SEC’s investigation is continuing.”