AON CORPORATION SETTLES BRIBERY CHARGES WITH SEC AND JUSTICE

The following excerpt is from the SEC website:

December 20, 2011
The Securities and Exchange Commission today filed a settled enforcement action in the U.S. District Court for the District of Columbia against Aon Corporation (Aon), an Illinois-based global provider of risk management services, insurance and reinsurance brokerage, alleging violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA). Aon will pay a total of approximately $14.5 million in disgorgement and prejudgment interest to the SEC. In a related action, Aon will pay a $1.764 million criminal fine to the U.S. Department of Justice (DOJ).

The Commission’s complaint alleges that Aon’s subsidiaries made over $3.6 million in improper payments to various parties between 1983 and 2007 as a means of obtaining or retaining insurance business in those countries. The complaint alleges that some of the improper payments were made directly or indirectly to foreign government officials who could award business directly to Aon subsidiaries, who were in position to influence others who could award business to Aon subsidiaries, or who could otherwise provide favorable business treatment for the company’s interests. The complaint alleges that these payments were not accurately reflected in Aon’s books and records, and that Aon failed to maintain an adequate internal control system reasonably designed to detect and prevent the improper payments.

According to the Commission’s complaint, the improper payments made by Aon’s subsidiaries fall into two general categories: (i) training, travel, and entertainment provided to employees of foreign government-owned clients and third parties; and (ii) payments made to third-party facilitators. Aon subsidiaries made these payments in various countries around the world, including Costa Rica, Egypt, Vietnam, Indonesia, United Arab Emirates, Myanmar, and Bangladesh. The complaint alleges that Aon realized over $11.4 million in profits from these improper payments.
Without admitting or denying the allegations in the Commission’s complaint, Aon consented to the entry of a final judgment permanently enjoining it from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and ordering the company to pay disgorgement of $11,416,814 in profits, together with prejudgment interest thereon of $3,128,206, for a total of $14,545,020. Aon’s proposed settlement offer has been submitted to the court for its consideration. In a related criminal proceeding, DOJ announced today that Aon has entered into a non-prosecution agreement under which the company will pay a $1.764 million criminal fine for the misconduct. Aon cooperated with the Commission’s and DOJ’s investigations and implemented remedial measures during the course of the investigations.

The Commission acknowledges the assistance of the Fraud Section of DOJ’s Criminal Division, the Federal Bureau of Investigation, and the Financial Services Authority of the U.K. in this matter."

SEC ANNOUNCES OCC HOLDINGS CASE HAS BEEN RESOLVED

 The following excerpt is from the SEC website:

"The Securities and Exchange Commission announced today that on November 30, 2011, the Honorable J. Paul Oetken of the United States District Court for the Southern District of New York entered consent judgments against the remaining defendants, Ahmed Awan and Yakov Koppel, in a case arising out of alleged fraudulent offerings of securities of OCC Holdings, Ltd, a/k/a OnCallContractors.com (“OCC Holdings”) and several other issuers. Without admitting or denying the allegations of the Commission’s complaint, Awan and Koppel, both of Brooklyn, New York, consented to the entry of judgment that permanently enjoins Awan and Koppel from future 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. The judgment further orders that Awan pay $655.41 in disgorgement plus prejudgment interest and a $10,000 civil penalty and that Koppel pay $850.53 in disgorgement plus prejudgment interest and a $10,000 civil penalty, and bars Koppel from participating in the offering of any penny stock.

In a related SEC administrative proceeding, Awan consented to the entry of an SEC order permanently barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock. In another related SEC administrative proceeding, Koppel consented to the entry of an SEC order permanently barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or national recognized statistical rating organization.

According the Commission’s complaint, filed on February 11, 2004, beginning in December 2001, Awan, Koppel, Khurram Tanwir, Alan Labineri, and Joseph Favata, along with three entity defendants, fraudulently raised more than $2 million from investors through three offerings: (1) the sale of purported private placement shares of OCC Holdings; (2) the sale of promissory notes issued by MB Holdings and other entities; and (3) the purported sale of restricted shares of an unrelated, privately owned company. The offerings were orchestrated by, and/or for the benefit of, Tanwir and/or Labineri, who had allegedly been conducting fraudulent offerings together since at least 1999. In conducting the offerings, the defendants allegedly made false and misleading promises of imminent initial public offerings (“IPOs”) and/or substantial increases in the stock price; falsely represented that the promissory notes were guaranteed and risk-free; misappropriated and used investor funds for personal expenses; and failed to disclose their disciplinary history.

In March and April, 2004, the Commission obtained emergency relief, including temporary restraining orders, orders freezing the assets of almost all of the defendants and relief defendants, and expedited discovery.

On December 3, 2008, following the granting of the Commission’s motion for summary judgment, final judgments were entered against Tanwir and Labineri in which they were permanently enjoined from future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, barred from participating in the offering of any penny stock and ordered, respectively, to pay $4,660,641.87 in disgorgement plus prejudgment interest and $3,432,739 in civil penalty (Tanwir) and $2,751,710.69 in disgorgement plus prejudgment interest and $2,026,739 in civil penalty (Labineri).

On February 20, 2009, the Commission obtained default judgments against defendants OCC Holdings, MB Holdings, and Equity Services Associates and relief defendants, Off World Strategic Holdings and MB Holdings USA Division A, Inc., in which the defendants were permanently enjoined from future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and MB Holdings and Equity Services Associates were permanently barred from participating in the offering of any penny stock. In addition, OCC Holdings was ordered to pay $1,716,270.94 in disgorgement plus prejudgment interest and $1,252,652 in civil penalty, MB Holdings was ordered to pay $1,926,374.56 in disgorgement plus prejudgment interest and $1,406,000 in civil penalty, and Equity Services Associates was ordered to pay $1,060,584.26 in disgorgement plus prejudgment interest and $774,087 in civil penalty. Furthermore, relief defendants, Off World Strategic Holdings and MB Holdings USA Division A were respectively ordered to pay $592,958.91 and $137,010.99 in disgorgement plus prejudgment interest.

On November 22, 2011, the Commission voluntarily dismissed all claims against defendant Favata."

SEC CHARGES BERNIE MADOFF EMPLOYEE WITH FALSIFYING RECORDS

The following is an excerpt from the SEC website: 

"Washington, D.C., Dec. 19, 2011 — The Securities and Exchange Commission today charged a longtime Bernie Madoff employee with falsifying books and records in order to hide Madoff’s fraudulent investment advisory operations from regulators.

The SEC alleges that Enrica Cotellessa-Pitz, who worked at Bernard L. Madoff Investment Securities LLC (BMIS) for more than 30 years, assisted in falsifying BMIS’s internal accounting records in order to misclassify hundreds of millions of dollars of income purportedly generated by BMIS’s investment advisory operations. Cotellessa-Pitz also falsified financial statements filed with the SEC and other regulators as well as materials that were prepared to deceive SEC staff examiners, federal and state tax auditors, and other external reviewers.

“To keep his massive fraud alive, Madoff had to hide as many facts about his advisory operations as possible,” said George S. Canellos, Director of the SEC’s New York Regional Office. “Cotellessa-Pitz along with other senior BMIS personnel played a critical role in this effort by creating false documents to deceive federal and state regulators.”

The SEC previously charged BMIS’s Director of Operations David Bonventrewith falsifying books and records to hide and obfuscate Madoff’s advisory operations. According to the SEC’s complaint against Cotellessa-Pitz filed in U.S. District Court for the Southern District of New York, she played a central role in falsifying these records as directed by Madoff and Bonventre. Madoff used the false records to artificially improve the firm’s reported revenue and income as well as to deceive regulators who sought to review the firm’s operations and financial results.

The SEC alleges that Madoff instructed employees to transfer hundreds of millions of dollars from bank accounts holding investor funds to the firm’s operating bank accounts. Madoff’s goal was as simple as it was misleading – to use stolen investor funds to hide the significant losses incurred by BMIS’s market-making and proprietary trading operations. Cotellessa-Pitz joined this effort after she was promoted to controller at the firm in 1998, when Madoff and Bonventre instructed her to falsely account for these transfers of investor funds as adjustments to certain securities positions on BMIS’s stock record.

According to the SEC’s complaint, Cotellessa-Pitz then used these figures to calculate and overstate the trading income purportedly generated by Madoff’s market-making and proprietary trading operations. Cotellessa-Pitz included these bogus figures on BMIS financial statements, which she then filed with the SEC and other regulators. Cotellessa-Pitz and other BMIS personnel then falsified documents provided to regulators to obscure the firm’s advisory operations and the transfer of investor funds to the operating bank accounts.

The U.S. Attorney’s Office for the Southern District of New York today announced parallel criminal charges against Cotellessa-Pitz, who has pled guilty and also consented to the entry of a partial judgment in the SEC’s civil case against her. Subject to court approval, the proposed partial judgment will impose a permanent injunction against Cotellessa-Pitz and require her to disgorge ill-gotten gains and pay a fine in amounts to be determined by the court at a later date.

The SEC’s complaint against Cotellessa-Pitz alleges that by engaging in this conduct, she aided and abetted violations of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-3, 17a-4, and 17a-5 thereunder, and Section 204 of the Investment Advisers Act of 1940 and Rule 204-2 thereunder.

The SEC’s investigation was conducted by Aaron P. Arnzen and Kristine M. Zaleskas of the New York Regional Office. The SEC thanks the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation for its coordination and assistance. The SEC’s investigation is continuing."

SEC ALLEGES STOCK BUY-BACK FRAUD

The following excerpt is from the SEC website: December 12, 2011 Securities and Exchange Commission v. Stiefel Laboratories Inc. and Charles W. Stiefel , (UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, CASE NO. 1:11-cv-24438, FILED DECEMBER 12, 2011) On December 12, 2011, the Securities and Exchange Commission filed securities fraud charges against Stiefel Laboratories Inc. (at the time of its misconduct the world’s largest private manufacturer of dermatology products, and now a fully-owned subsidiary of GlaxoSmithKline PLC) and Charles Stiefel, its former chairman and CEO, alleging they defrauded shareholders by buying back their stock at severely undervalued stock prices from November 2006 to April 2009. The SEC alleges that in each of those years Stiefel Labs and Charles Stiefel used low valuations for stock buybacks and omitted to disclose to the Company’s own employees important information that would have alerted them that their stock was worth much more (information that only certain members of the Stiefel family and senior management knew about). The SEC’s complaint, filed in the Southern District of Florida, alleges that first, between November 2006 and April 2007, Stiefel Labs purchased more than 750 shares of Stiefel Labs stock from shareholders at $13,012 a share even though 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 more than 50% to 200% higher than the valuation later used for stock buybacks . Second, the complaint alleges that between late July 2007 and June 2008, Stiefel Labs purchased more than 350 additional shares of Stiefel Labs stock from shareholders under the Company’s employee stock plan at $14,517 a share. It also bought more than 1,050 shares from shareholders outside the Plan at an even lower stock price. 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% higher than that used for stock buybacks . Third, the complaint alleges that between December 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. Indeed, b eginning in late November 2008, Stiefel Labs decided to seek acquisition bids from several pharmaceutical companies. On January 26, 2009, Glaxo expressed interest in a Stiefel Labs acquisition and signed a confidentiality agreement on January 28, 2009. As late as March 16, 2009, Charles Stiefel ordered that the ongoing negotiations not be disclosed to employees and Stiefel Labs misled shareholders to believe the Company would remain family-owned. On April 20, 2009, Stiefel Labs announced that Glaxo would acquire the Company for a value that amounted to more than $68,000 per share (more than 300% higher than the $16,469 Stiefel Labs paid to buy back shares from its shareholders). As a result of their violations of the federal securities laws Stiefel Labs and Charles Stiefel benefitted greatly and shareholders lost more than $110 million by selling their stock to Stiefel Labs based on the misleading valuations Stiefel Labs and Charles Stiefel had provided them. The SEC’s complaint charges Stiefel Labs with violating and Charles Stiefel with violating and aiding and abetting Stiefel Labs’ violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a final judgment permanently enjoining the defendants from future violations of these provisions of the federal securities laws and ordering them to disgorge their ill-gotten gains plus prejudgment interest and pay financial penalties, and also seeks an officer and director bar against Charles Stiefel."

U.S., CANADA AND MEXICO MEET TO DISCUSS ANTITRUST POLICIES

The following excerpt is from the Department of Justice website: DECEMBER 19, 2011 "WASHINGTON — The heads of the antitrust agencies of the United States, Canada and Mexico – Acting Assistant Attorney General Sharis A. Pozen of the Department of Justice’s Antitrust Division, Chairman Jon Leibowitz of the Federal Trade Commission, Canadian Commissioner of Competition Melanie Aitken and President Eduardo Perez Motta of the Mexican Federal Competition Commission – met today to reaffirm their commitment to effective enforcement cooperation.  The discussions covered a wide range of enforcement and policy issues, including updates on merger policy and enforcement in the three jurisdictions and the sharing of recent experience in areas of mutual enforcement interest. “Working with our antitrust colleagues across both United States borders to ensure that antitrust enforcement is effective is good for businesses and consumers,” said Acting Assistant Attorney General Pozen.  “The department values its close law enforcement relationships with Canada and Mexico, and I look forward to our continued efforts to work together to combat anticompetitive activity that affects North America.” The United States, Canada and Mexico are parties to a series of bilateral antitrust cooperation agreements that commit their antitrust agencies to cooperate and coordinate with each other in order to make their antitrust policies and enforcement as consistent and effective as possible.  The three nations also are parties to the North American Free Trade Agreement, which includes a competition chapter that provides for cooperation among them in antitrust investigations."

SEC ALLEGES PENNY STOCK PUBLICATION MADE MATERIAL MISREPRESENTATIONS AND OMISSIONS

The following excerpt is from the SEC website: December 12, 2011 Securities and Exchange Commission v. Geoffrey J. Eiten and National Financial Communications Corp., 1:11-CV-12185 (District of Massachusetts, Complaint filed December 12, 2011) SEC CHARGES MASSACHUSETTS-BASED PENNY STOCK PROMOTER WITH MAKING FRAUDULENT STATEMENTS The Securities and Exchange Commission, in an action filed today in federal court in Boston, charged Massachusetts resident Geoffrey J. Eiten and his company National Financial Communications Corp. (“NFC”) for making material misrepresentations and omissions in a penny stock publication they issued. The Commission’s complaint alleges that Eiten and NFC publish a penny stock promotion piece called the “OTC Special Situations Reports.” According to the complaint, Eiten, self-proclaimed “America’s Leading Micro-Cap Stock Picker,” promotes penny stocks in this publication on behalf of clients in order to increase the price per share and/or volume of trading in the market for the securities of penny stock companies. The complaint alleges that Eiten and NFC have made misrepresentations in these reports about the penny stock companies they are promoting. For example, the Commission’s complaint alleges that during 2010, Eiten and NFC issued reports promoting four penny stock companies: (1) Clean Power Concepts, Inc., based in Regina, Saskatchewan, Canada, a purported manufacturer and distributor of various fuel additives and lubrication products made from crushed seed oil; (2) Endeavor Power Corp., based in Robesonia, Pennsylvania, a purported recycler of value metals from electronic waste; (3) Gold Standard Mining, based in Agoura Hills, California, a purported owner of Russia gold mining operations; and (4) Nexaira Wireless Corp., based in Vancouver, British Columbia, Canada, a purported developer and seller of wireless routers. The Commission’s complaint alleges that in these four reports, Eiten and NFC made material misrepresentations and omissions, concerning, among other things, the companies’ financial condition, future revenue projections, intellectual property rights, and Eiten’s interaction with company management as a basis for his statements. According to the complaint, Eiten and NFC were hired to issue the above reports. Eiten and NFC used false information provided by their clients, without checking the accuracy of the information with the companies in question or otherwise ensuring that the statements they were making in the OTC Special Situations Report were true. The Commission’s complaint charges Eiten and NFC with violating the antifraud provisions of the federal securities laws (Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder). In its complaint, the Commission seeks permanent injunctions, disgorgement plus prejudgment interest, civil penalties, and penny stock bars pursuant to Section 21(d)(6) of the Exchange Act against the defendants."