UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 77016 / February 2, 2016

_____________________________________________________________________

Omnibus Order Directing the Appointment of Tax Administrator in 

Administrative Proceedings that Establish Distribution Funds

The Commission’s orders in administrative proceedings may lead to the payment of 

disgorgement and/or penalties for distribution. Such distribution funds may create qualified 

settlement funds (“QSFs”) under Treasury Regulation 1.468B-1(c), 26 CFR § 1.468B1(c), and have a variety of tax-related obligations. The Division of Enforcement

(“Division”) has evaluated the proposals received from potential tax administrators for the 

QSFs and, of those proposals, has determined that Damasco & Associates LLP

(“Damasco”), a certified public accounting firm located in Half Moon Bay, California, is 

best suited to act as tax administrator for the QSFs for calendar years 2016 through 2018

in such administrative proceedings.

Accordingly,

IT IS ORDERED that:

A. Pursuant to the Commission’s Rules on Fair Fund and Disgorgement Plans (17 

CFR §§ 201.1101, et seq.), Damasco is appointed as the tax administrator (the 

“Tax Administrator”) when requested by staff in calendar years 2016 through 

2018 in those administrative proceedings where distribution funds have been 

established. For the life of the distribution funds to which Damasco is

appointed in 2016, 2017 and 2018, Damasco will have the limited authority 

and power to: (1) act as the administrator for tax purposes for each QSF; (2) 

prepare, sign, and file the necessary tax returns and tax-related documents for 

the QSFs; (3) make the tax payments on behalf of the QSFs; (4) obtain the 

necessary tax-related documents and identifiers, such as an employer 

identification number, on behalf of the QSFs; (5) perform other tax-related 

and reporting duties on behalf of the QSFs as required by Department of the 

Treasury regulations relating to QSF administrators; (6) prepare a final 

accounting when a QSF distribution has been completed, on a form 

provided by the SEC; (7) prepare distribution checks and mail to injured 

investors for small QSFs, when requested to do so by a fund administrator

pursuant to a Commission approved distribution plan; and (8) communicate 

on behalf of the QSFs on matters set forth in this paragraph.
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B. The Tax Administrator will, from time to time, have custody or control of 

monies transferred quarterly to the Tax Administrator to make tax 

payments. Therefore, the Tax Administrator, before taking possession of 

those monies, will obtain a bond, pursuant to the 2016-2018 Letter 

Agreement executed between the Commission and the Tax Administrator. 

The bond will be in the annual amount of $350,000 for calendar years 

2016, 2017, and 2018. If it is determined this amount is not sufficient, 

pursuant to Section 4A of the Securities Exchange Act of 1934 (15 U.S.C. §

78d-1), the Assistant Director of the Office of Distributions (“OD”) and the 

Supervisory Assistant Chief Litigation Counsel (“SACLC”) in the OD or 

the equivalent level manager, will have authority to raise the bond amount 

up to $1 million.

C. The Tax Administrator willsubmit, at least 30 days prior to any date on which a 

tax payment is required on behalf of any QSF or as soon as is practicable, 

documentation showing the amount necessary to satisfy the tax liability of each 

QSF as well as all other documents supporting such amount, to the 

following: 

1. Where the Respondent has agreed to pay the taxes of the QSF, the 

Tax Administrator will submit the documentation to the Respondent, with a 

copy to: the Commission staff member assigned to the proceeding and to the 

Distributions Program Analysis mailbox. 

The Respondent will pay the amount of the documented taxes to the Tax 

Administrator by check or wire transfer. The Tax Administrator, in turn, will be 

responsible for paying the taxes to the Internal Revenue Service (“IRS”) and the 

relevant state and local taxing authority, if any, on behalf of the QSF. The Tax 

Administrator will provide written confirmation of the payment of the taxes to 

the Commission staff member assigned to the proceeding and to the 

Distributions Program Analysis mailbox. 

 

2. Where the money in the QSF is held by an escrow agent, the 

Tax Administrator will submit the documentation to the escrow agent, with a 

copy to the Commission staff member assigned to the proceeding and to the 

Distributions Program Analysis mailbox. 

Upon approval to disburse by the staff to whom authority is 

delegated by paragraph F., below, the escrow agent will disburse to the Tax 

Administrator, by check or wire transfer from the QSF, the amount of taxes as 
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calculated by the Tax Administrator. Such tax payments will come first from 

any earnings or interest in the QSF, and second, if necessary, from the principal 

of the QSF. The Tax Administrator, in turn, will be responsible for paying the 

taxes to the IRS and the relevant state and local taxing authority, if any, on 

behalf of the QSF. The Tax Administrator will provide written confirmation 

of the payment of the taxes to the Commission staff member assigned to the 

proceeding and to the Distributions Program Analysis mailbox. 

3. In all other proceedings, the Tax Administrator will submit 

documentation to the Commission staff member assigned to the proceeding and 

to the Distributions Program Analysis mailbox. 

Upon approval to disburse by staff to whom authority is delegated by 

paragraph F., below, the Commission staff will disburse to the Tax 

Administrator, by check or wire transfer from the QSF, the amount of the taxes 

as calculated and documented by the Tax Administrator. Such tax payments 

will come first from any earnings or interest in the QSF and second, if 

necessary, from the principal of the QSF. The Tax Administrator, in turn, will

be responsible for paying the taxes to the IRS and the relevant state and local 

taxing authority, if any, on behalf of the QSF. The Tax Administrator will

provide written confirmation of the payment of the taxes to the Commission 

staff member assigned to the proceeding and to the Distributions Program 

Analysis mailbox. 

D. The Tax Administrator will comply with all reporting requirements applicable 

to a QSF as defined in Treasury Regulation 1.468B-1(a), as amended, and will

file on a timely basis all required federal, state, and local tax returns and will

contemporaneously provide copies of such filings to the assigned Commission 

staff member and to the Distributions Program Analysis mailbox. 

E. The Tax Administrator will keep records and bill each QSF for the services 

provided to it pursuant to the 2016-2018 Letter Agreement executed between the 

Commission and the Tax Administrator. 

1. In the proceedings in which the Respondent has agreed to pay for the 

expenses of the QSF, the Tax Administrator will submit the bill to the 

Respondent for payment by check or wire transfer. 

2. Where the money in the QSF is held by an escrow agent, the Tax 

Administrator will submit the bill to the assigned Commission staff member and 
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to the Distributions Program Analysis mailbox for approval. Where services 

have been billed according to the terms of the Tax Administrator’s 2016-2018

Letter Agreement with the Commission, and are for an amount less than or 

equal to $10,000 per case per tax filing per quarter, payment may be approved 

by staff to whom authority is delegated by paragraph F., below. For bills 

totaling an amount greater than $10,000 per case per tax filing per quarter, the 

Commission staff assigned to the proceeding must seek Commission approval 

for payment. After payment of the Tax Administrator’s bill has been approved, 

the escrow agent is authorized to pay the bill of the Tax Administrator by check 

or wire transfer from the QSF. Payment will come first from any earnings or 

interest in the QSF and second, if necessary, from the principal of the QSF. 

3. In all other proceedings, the Tax Administrator will submit the bill 

to the assigned Commission staff member and to the Distributions Program 

Analysis mailbox for approval. After payment of the Tax Administrator’s bill

has been approved, which approval will be as described in paragraph E.2., 

above, the Commission staff will pay the bill of the Tax Administrator by check 

or wire transfer from the QSF. Payment will come first from any earnings or 

interest in the QSF and second, if necessary, from the principal of the QSF. 

In all proceedings, the fees billed will be as agreed upon in the Tax 

Administrator’s 2016-2018 Letter Agreement with the Commission, as 

executed by the Secretary of the Commission on behalf of the Commission.

 F. Pursuant to Section 4A of the Securities Exchange Act of 1934 (15 U.S.C. §

78d-1), the authority as set forth in paragraphs C.2., C.3., E.2. and E.3., above,

to approve the payment of the Tax Administrator’s fees and expenses and to 

approve the disbursement of QSF tax payments based on the calculations of the 

Tax Administrator is delegated to the Assistant Director of the OD and to the 

SACLC in the OD or the equivalent level manager. 

 G. The Secretary of the Commission will, upon request by the Division staff

during calendar years 2016, 2017, and 2018, issue orders that appoint Damasco 

as the Tax Administrator in administrative proceedings.

By the Commission.

Brent J. Fields

 Secretary