SEC FILES INJUCTION IN ALLEGED SCHEME TO OVERVLUE ILLIQUID ASSETS

The following excerpt is from the SEC website: December 2, 2011 “The Securities and Exchange Commission announced today that it filed a civil injunctive action in the United States District Court for the Southern District of New York charging two individuals with engaging in a fraudulent scheme to overvalue illiquid asset holdings of the now insolvent hedge fund, Millennium Global Emerging Credit Fund (the "Fund"), and thereby inflate the Fund's reported returns and net asset value. The defendants named in the Commission's complaint are Michael Balboa, the Fund's former portfolio manager, and Gilles De Charsonville, a broker with BCP Securities, LLC. The SEC's complaint alleges that from January through October 2008, Balboa surreptitiously provided De Charsonville and another broker with fictional prices for them to pass on to the Fund's outside valuation agent and its auditor. Specifically, Balboa had De Charsonville and the other broker portray the valuations for two of the Fund's illiquid securities holdings, Nigerian and Uruguayan warrants, as ostensibly independent month-end "marks" that were provided by third-party sources. In fact, Balboa completely fabricated the prices which De Charsonville and the other broker were complicit in passing onto the valuation agent and auditor for these two securities. This scheme caused the Fund to drastically overvalue these two securities holdings by as much as $163 million in August 2008, which, in turn, allowed the Fund to report inflated and false-positive monthly returns. By overstating the Fund's returns and overall net asset value, Balboa was able to attract at least $410 million in new investments, deter about $230 million in eligible redemptions and generate millions of dollars in inflated management and performance fees. The SEC's complaint charges the defendants with committing and/or aiding and abetting violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 206 of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder and, as to Balboa, Section 17(a) of the Securities Act of 1933. De Charsonville is also charged with violating Financial Industry Regulatory Authority Rule 5210. As to both defendants, the SEC's complaint seeks a permanent injunction against future violations, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties. The United States Attorney's Office for the Southern District of New York ("USAO"), which conducted a parallel investigation of this matter, has also announced the arrest of Balboa and the simultaneous filing of a criminal complaint against him. The SEC acknowledges the assistance and cooperation of the USAO, United States Postal Inspection Service, U.K. Financial Services Authority, Bermuda Monetary Authority, the Comisión Nacional del Mercado de Valores, the Guernsey Financial Services Authority, and Nigeria Securities and Exchange Commission in this matter. The SEC's investigation is continuing.”

COURT ORDERS FOUNDERS OF INTEGRITY FINANCIAL TO PAY $4.2 MILLION FOR FRAUDULANT PROMISSORY NOTES

The following excerpt is from the SEC website: "The U.S. Securities and Exchange Commission (Commission) today announced that, on November 23, 2011, the U.S. District Court for the Northern District of Ohio entered final judgments against Steven R. Long and Stanley M. Paulic in a Commission injunctive action, United States Securities and Exchange Commission v. Integrity Financial AZ, LLC, Steven R. Long, Stanley M. Paulic, Walter W. Knitter, and Robert C. Koeller, Civil Action No. 10-CV-782 (SO) (N.D. Ohio filed Apr. 15, 2010). The Commission’s complaint alleges that Long and Paulic founded Integrity Financial AZ, LLC (IFAZ) and, with assistance from Walter W. Knitter and Robert C. Koeller, used the company to raise more than $8 million in a fraudulent unregistered offering of promissory notes purportedly secured by real estate in Arizona. The final judgments were entered after the district court granted the Commission’s motion for summary judgment against Long and Paulic. The order granting summary judgment found that Long “knowingly made misrepresentations or omissions of material fact regarding the offer and sale of securities, while utilizing investors’ money for his own gain” and that “Paulic misrepresented material facts in connection with the offer and sale of securities” and “acted recklessly in conjunction with his activities and responsibilities as CEO and co-owner of IFAZ.” The final judgments against Long and Paulic permanently enjoin each of them from further violations of Sections 5 and 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rule 10b‑5. The final judgment against Long also finds him liable for disgorgement in the amount of $1,481,736, plus prejudgment interest thereon in the amount of $97,723.32, and a civil penalty in the amount of $1,465,306. The final judgment against Paulic also finds him liable for disgorgement in the amount of $586,225, plus prejudgment interest thereon in the amount of $38,662.65, and a civil penalty in the amount of $586,225. The Commission also announced today, that on October 7, 2011, the district court entered a default judgment against IFAZ permanently enjoining it from violations of Sections 5 and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act, and Exchange Act Rule 10b‑5, and finding it liable for disgorgement in the amount of $5,598,717, plus prejudgment interest thereon in the amount of $429,403.44, and a civil penalty in the amount of $650,000. Knitter settled with the Commission previously. The remaining defendant, Koeller, reached a partial settlement with the Commission on September 28, 2011."

OPTIONS TRADER GETS CHARGED BY SEC WITH FAILURE TO DELIVER SHORT SALES SHARES

The following excerpt is from the Securities and Exchange Commission’s website: “Washington, D.C., Dec. 13, 2011 — The Securities and Exchange Commission today charged an options trader in the Chicago area with violating short selling restrictions when he failed to locate and deliver the shares involved in short sales to broker-dealers and their institutional customers. The trader agreed to pay more than $2 million to settle the SEC’s charges. According to the SEC’s order instituting administrative proceedings, Gary S. Bell violated the “locate” and “close out” requirements of Regulation SHO, which require market participants to locate a source of borrowable shares prior to selling short and to deliver those securities by a specified date. Market makers who ensure liquidity in the market are excepted from these requirements if they are engaged in bona-fide market making activities in the security for which the exception is claimed. The SEC’s order finds that Bell improperly relied on the market maker exception in his line of business that essentially loaned large amounts of hard-to-borrow stock to broker-dealers, who then provided their customers with locates on those shares and lucrative stock loans of those shares. The customers then sold short certain securities that they may not have otherwise been able to without Bell’s participation. However, because the stock being provided by Bell was not truly available for delivery to the broker-dealers or their short selling customers, Bell actually was effecting illegal “naked” short sales. “Bell avoided the cost of borrowing shares while engaging in complex short selling transactions, thus earning significant profits with minimal risk and gaining an advantage over legitimate participants in the market,” said George S. Canellos, Director of the SEC’s New York Regional Office. “We’ll continue aggressively to pursue and punish abusive short sellers who attempt to circumvent regulatory requirements to make more money.” According to the SEC’s order, Bell effected naked short sales from December 2006 to June 2007 while working as a broker-dealer himself and then later as the principal trader at Chicago-based broker-dealer GAS I LLC, which is no longer in business. Bell and GAS engaged in two specific types of transactions that violated the locate and close-out requirements of Regulation SHO. The first type of transaction — a “reverse conversion” or “reversal” — involves selling stock short and simultaneously selling a put option and buying a call option on the stock. The second type of transaction is a combined stock-and-option transaction that is essentially a sham and creates the illusion that the party subject to a close-out obligation has satisfied that obligation by buying the same kind and quantity of securities it has sold short. The SEC’s order finds that Bell’s and GAS’s transactions created the false appearance of compliance with the requirements of Regulation SHO. The shares that were apparently purchased in the transactions were never actually delivered because they were purchased from a “naked” short seller, and left Bell and GAS with persistent “fail-to-deliver” positions, meaning that they did not deliver shares to make good on their sales of stock. The market maker exception to Regulation SHO was not available to either Bell or GAS because they were not engaging in bona-fide market making activities in these securities. As a result of his short selling violations, Bell received ill-gotten gains of at least $1.5 million. Bell settled the SEC’s administrative proceedings without admitting or denying the SEC’s findings. The Commission’s order requires Bell to cease and desist from committing or causing violations of Rules 203(b)(1) and 203(b)(3) of Regulation SHO, and suspends Bell from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization for a period of nine months. Bell is required to pay $1.5 million in disgorgement, $336,094 in prejudgment interest, and a $250,000 penalty. The SEC acknowledges the assistance of the Chicago Board Options Exchange in this matter. The SEC’s investigation into violations of Regulation SHO is continuing.”

FORMER CEO CHARGED WITH MARKET MANIPULATION

"The Securities and Exchange Commission charged Giuseppe Pino Baldassarre, the former CEO of Dolphin Digital Media, Inc. (“Dolphin”), Robert Mouallem, a registered representative, and Malcolm Stockdale, a Dolphin shareholder, with engaging in a fraudulent broker bribery scheme designed to manipulate the market for Dolphin’s common stock. Baldassarre, age 53 and a resident of Indialantic, Florida, was Dolphin’s President from May 15, 2007 until March 20, 2009, and Dolphin’s CEO from May 15, 2007 until June 25, 2008. Mouallem, age 56 and a resident of Boca Raton, Florida, is a registered representative at Garden State Securities, Inc., a registered broker-dealer. Stockdale, age 66 and a resident of Prince Edward Island, Canada, is the owner of Winterman Group Ltd., a Canadian limited liability company. The complaint, filed today in federal court in Brooklyn, New York, alleges that from at least October 2009 until April 2010, Baldassarre, Stockdale, and Mouallem engaged in a fraudulent scheme to manipulate the market for Dolphin stock through matched trades and by bribing registered representatives to purchase Dolphin stock. The complaint also alleged that Baldassarre and Stockdale entered into a kickback arrangement with an individual (“Individual A”) who claimed to represent a group of registered representatives with trading discretion over the accounts of wealthy customers. Baldassarre and Stockdale promised to pay a 30% kickback to Individual A and the registered representatives he represented in exchange for the purchase of up to seven million shares of Dolphin stock for at least $3 million. The complaint further alleges that between March 31 and April 6, 2010, and in accordance with the illicit arrangement, Mouallem, who was responsible for handling the sales, instructed Individual A to purchase approximately 105,000 shares of Baldassarre and Stockdale’s Dolphin stock for a total of approximately $38,100. Mouallem gave Individual A detailed instructions concerning the size, price and timing of the orders. In this way, Mouallem was able to insure that almost all of Individual A’s purchase orders were matched with Mouallem’s sell orders at prices Mouallem predetermined. Thereafter, Baldassarre paid Individual A bribes of approximately $11,440 for those purchases. The complaint charges Baldassarre, Mouallem, and Stockdale with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Commission seeks permanent injunctive relief from the Defendants, disgorgement of ill-gotten gains, if any, plus pre-judgment interest, civil penalties, penny stock bars, and a judgment prohibiting Baldassarre from serving as an officer or director of a public company. The Commission acknowledges assistance provided by the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter." "

"SHELL PACKAGING" FIRM CHARGED BY SEC WITH ISSUEING UNRESTRICTED SHARES OF STOCK TO THE PUBLIC

The following excerpt is from the SEC website: December 12, 2011 "Securities and Exchange Commission v. Alternative Green Technologies, Inc., et al., Civil Action No. 11-cv-9056 (S.D.N.Y. December 12, 2011) (DAB) SEC Charges “Shell Packaging” Firm and Its CEO in Fraudulent Scheme The Securities and Exchange Commission today charged a shell packaging firm and several others involved in a penny stock scheme to issue purportedly unrestricted shares in the public markets. The SEC alleges that Joseph Meuse and his firm Belmont Partners LLC – which is in the business of identifying and selling public shell companies for use in reverse mergers – fabricated and backdated documents used to convince a transfer agent and an attorney writing an opinion letter to issue free-trading shares of Alternative Green Technologies Inc. (AGTI). The SEC also charged AGTI and its CEO Mitchell Segal as well as Segal’s business partner Howard Borg and stock promoters David Ryan, Vikram Khanna and Panascope Capital Inc. for their roles in the scheme that resulted in unknowing investors purchasing fraudulently issued AGTI shares without the protections afforded by the securities laws. According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Long Island, N.Y.-based AGTI and Segal, an attorney licensed to practice in New York, knowingly submitted false documents to a transfer agent and an attorney, who relied on them to conclude that free-trading shares of AGTI could legitimately be issued. Virginia-based Belmont and Meuse aided and abetted AGTI’s fraud by knowingly creating and sometimes backdating the false documentation, including a sham assignment of debt and a fabricated and backdated corporate resolution and convertible note. Segal then used the stock certificates illegally issued to fund promotional campaigns promoting AGTI’s stock. The stock promoters – Ryan, Panascope Capital and its president Khanna – were charged with selling the unregistered securities. The SEC’s complaint charges all defendants with violating Section 5 of the Securities Act of 1933, and AGTI and Segal with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. Segal, Meuse and Belmont are charged with aiding and abetting the fraud by AGTI. The SEC’s complaint seeks permanent injunctions and disgorgement against all defendants; a financial penalty against AGTI, Segal, Belmont, Meuse and Ryan; and officer and director and penny stock bars against Segal and Meuse. The SEC’s complaint also names several relief defendants for the purposes of recovering proceeds they received from the illicit stock sales. Borg, Khanna and Panascope Capital have consented to the entry of a final judgment enjoining them from further violations of Section 5 of the Securities Act without admitting or denying the allegations in the SEC’s complaint. Khanna and Panascope Capital agreed to pay $81,477.10 to settle the charges, and Borg agreed to pay $35,264.05 and surrender to the transfer agent for cancellation more than four million shares of AGTI stock that were illegally issued. The settlements are subject to court approval."

GLAXOSMITHKLINE SUSIDIARY CHARGED WITH ALLEGED FRAUD BY SEC

The following excerpt comes from an SEC e-mail received on 12-12-2011" 2/12/2011 10:35 AM EST "FOR IMMEDIATE RELEASE 2011-261 Washington, D.C., Dec. 12, 2011 – The Securities and Exchange Commission today charged a subsidiary of pharmaceutical company GlaxoSmithKline and the subsidiary’s former chairman and CEO with defrauding employees and other shareholders in the company’s stock plan by buying back their stock at severely undervalued prices. The SEC alleges that Stiefel Laboratories Inc., which was a family-owned business located in Coral Gables, Fla., prior to being purchased by GlaxoSmithKline two years ago, used low valuations for stock buybacks from November 2006 to April 2009. Stiefel Labs omitted key information that would have alerted employees that their stock was actually worth much more. Instead, the information was confined to then-CEO Charles Stiefel and certain members of his family as well as some senior management. At the time, Stiefel Labs was the world’s largest private manufacturer of dermatology products. “Stiefel Labs and Charles Stiefel profited at the expense of their employee shareholders who lost more than $110 million by selling their stock based on the misleading valuations they were provided,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Private companies and their officers must understand that they are not immune from the federal securities laws, which protect all shareholders regardless of whether they bought stock in the open market or earned shares through a company’s stock plan.” According to the SEC’s complaint filed in U.S. District Court for the Southern District of Florida, Stiefel Labs purchased more than 750 shares of company stock from shareholders between November 2006 and April 2007 at a price of $13,012 per share. Charles Stiefel knew that five private equity firms had submitted offers to buy preferred stock in November 2006 based on equity valuations of Stiefel Labs that were approximately 50 to 200 percent higher than the valuation later used for stock buybacks. The SEC alleges that between late July 2007 and June 2008, Stiefel Labs purchased more than 350 additional shares of company stock from shareholders under the company’s employee stock plan at $14,517 per share. It also bought more than 1,050 shares from shareholders outside the plan at even lower stock prices. At the time of these buybacks, Charles Stiefel knew not only about the November 2006 private equity valuations, but that a prominent private equity firm had bought preferred stock based on an equity valuation for Stiefel Labs that was more than 300 percent higher than that used for stock buybacks. The SEC’s complaint further alleges that between Dec. 3, 2008 and April 1, 2009, Stiefel Labs purchased more than 800 shares of its stock from shareholders at $16,469 a share even though Charles Stiefel knew that equity valuation was low and misleading, in part because he was negotiating the sale of the company. Beginning in late November 2008, Stiefel Labs decided to seek acquisition bids from several pharmaceutical companies. On Jan. 26, 2009, GlaxoSmithKline expressed interest in a Stiefel Labs acquisition and signed a confidentiality agreement two days later. As late as March 16, 2009, Charles Stiefel ordered that the ongoing negotiations not be disclosed to employees, and he misled shareholders to believe the company would remain family-owned. On April 20, 2009, Stiefel Labs announced that GlaxoSmithKline would acquire the company for a value that amounted to more than $68,000 per share. This price was more than 300 percent higher than the per share price that Stiefel Labs had been paying to buy back shares from its shareholders. The SEC’s complaint alleges Stiefel Labs violated and Charles Stiefel violated and aided and abetted Stiefel Labs’ violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC’s complaint seeks permanent injunctive relief, financial penalties, and the disgorgement of ill-gotten gains with prejudgment interest against both defendants, and an officer and director bar against Charles Stiefel. The SEC’s investigation was conducted by attorney Drew D. Panahi and accountant Kathleen Strandell in the SEC’s Miami Regional Office under the supervision of Thierry Olivier Desmet. Christopher E. Martin of the Miami Regional Office will be litigating the SEC’s case."