Source: https://www.sec.gov/news/digest/2012/dig040312.htm
Timestamp: 2019-04-18 12:46:28+00:00

Document:
The Securities and Exchange Commission announced today that its senior staff met last week with counterparts at the Ontario Securities Commission (OSC) to discuss ways to further strengthen cooperation regarding their supervision of financial firms.
At the March 28 meeting, the agencies’ staffs discussed a variety of issues, including their respective approaches to examinations, investor education initiatives, and the status of regulatory reforms in each jurisdiction. The SEC and OSC staffs also discussed additional coordination in the oversight of dually regulated entities, and they agreed to meet regularly to discuss issues of mutual significance regarding supervisory coordination and emerging risks in the cross-border market.
The meeting is part of an effort detailed in a June 2010 memorandum of understanding concerning consultation, cooperation, and the exchange of information regarding the supervision of entities regulated both in the U.S. and Canada.
On April 2, 2012, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Alex Martinez. The Order finds that on January 30, 2012, a judgment was entered against Alex Martinez, permanently enjoining him, by consent, from future violations of 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) and 206(2) of the Advisers Act, in the civil action entitled Securities and Exchange Commission v. MAM Wealth Management, LLC, et al., Civil Action Number, CV 11-2934 SJO (JCx) in the United States District Court for the Central District of California, Western Division.
The Order further finds that the Commission’s complaint alleged that from July 2007 through March 2009, Martinez and his codefendant invested approximately $10.3 million of their advisory clients’ funds in MAM Wealth Management Real Estate Fund, LLC (Fund), a speculative and risky investment suitable only for sophisticated investors. Despite his knowledge of these risks, Martinez knowingly and recklessly misrepresented to clients that the Fund was a safe and relatively liquid investment. In addition, Martinez and his codefendant used their discretionary authority over the funds of MAM clients to invest substantial client assets into the Fund, in breach of their fiduciary duty because the Fund was an unsuitable investment for their clients who were unaccredited investors, retirees with limited means, or the Fund was contrary to the clients’ stated conservative investment goals.
On April 3, 2012, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Jerry L. Aubrey (Aubrey). The Order finds that on December 20, 2011, a final judgment was entered against Aubrey in Securities and Exchange Commission v. Jerry L. Aubrey, et al. (Civil Action Number SACV 11-1564 JVS (RNBx) (C.D. Cal.)), permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and permanently enjoining him and any entity he owns or controls from offering unregistered securities.
On April 3, 2012, the United States Securities and Exchange Commission (Commission) issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940 and Notice of Hearing against Andrey C. Hicks (Hicks).
The Order finds that Hicks was enjoined from 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 Advisers Act and Rule 206(4)-8 thereunder, in the civil action entitled Securities and Exchange Commission v. Andrey C. Hicks and Locust Offshore Management, LLC, as Defendants, and Locust Offshore Fund, Ltd., as Relief Defendant, Civil Action No. 1:11-CV-11888-RGS (in the United States District Court for the District of Massachusetts). In the Order, the Division of Enforcement alleges that from at least June 2011 until October 2011, Hicks and his investment advisory firm, Locust Offshore Management, LLC, engaged in a fraudulent scheme to defraud investors by making numerous misrepresentations when soliciting individuals to invest in a non-existent pooled investment fund called Locust Offshore Fund. The complaint alleged that Hicks and Locust made a number of materially false and misleading statements about the educational and professional background of Hicks; the existence of Locust Offshore Fund as a legitimate company incorporated under the laws of the British Virgin Islands; and the existence of a purported auditor, prime broker, and custodian for Locust Offshore Fund. By making these representations and creating other indicia of legitimacy, the complaint alleged that Hicks and Locust obtained at least $1.7 million from 10 investors, transferred substantially all of these funds to Hicks’ personal bank accounts, and misappropriated at least a portion of these funds for Hicks’ personal expenses.
On April 3, 2012, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(e) of the Investment Advisers Act of 1940 and Notice of Hearing against Locust Offshore Management, LLC (Locust).
The Order finds that Locust was enjoined from 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 Advisers Act and Rule 206(4)-8 thereunder, in the civil action entitled Securities and Exchange Commission v. Andrey C. Hicks and Locust Offshore Management, LLC, as Defendants, and Locust Offshore Fund, Ltd., as Relief Defendant, Civil Action No. 1:11-CV-11888-RGS (in the United States District Court for the District of Massachusetts). In the Order, the Division of Enforcement alleges that from at least June 2011 until October 2011, Locust and its CEO, Andrey C. Hicks, engaged in a fraudulent scheme to defraud investors by making numerous misrepresentations when soliciting individuals to invest in a non-existent pooled investment fund called Locust Offshore Fund. The complaint alleged that Locust and Hicks made a number of materially false and misleading statements about the educational and professional background of Hicks; the existence of Locust Offshore Fund as a legitimate company incorporated under the laws of the British Virgin Islands; and the existence of a purported auditor, prime broker, and custodian for Locust Offshore Fund. By making these representations and creating other indicia of legitimacy, the complaint alleged that Locust and Hicks obtained at least $1.7 million from 10 investors, transferred substantially all of these funds to Hicks’ personal bank accounts, and misappropriated at least a portion of these funds for Hicks’ personal expenses.
On April 2, 2012, the Securities and Exchange Commission sued two former executives at an Austin, Texas-based ArthroCare Corporation to recover bonus compensation and stock sale profits they received during a period when the company’s financial statements were misstated due to accounting fraud.
According to the SEC’s complaint filed in federal court in Austin, former ArthroCare CEO Michael A. Baker and former CFO Michael T. Gluk are not charged with personal misconduct, but they are still required under Section 304 of the Sarbanes-Oxley Act (SOX) to reimburse ArthroCare for bonuses and stock profits that they received after the company filed fraudulent financial statements during 2006, 2007, and the first quarter of 2008.
Court Enters Final Judgment Against Defendant Anthony M. Cimini, Sr.
The Commission announced that on March 30, 2012, the United States District Court for the Middle District of Florida entered a Final Judgment, by consent, against Defendant Anthony M. Cimini, Sr.. The Final Judgment orders Cimini to pay disgorgement of $18,100, representing profits gained as a result of the conduct alleged in the Complaint, prejudgment interest thereon in the amount of $4,428.91, and a civil penalty in the amount of $18,100, pursuant to Section 20(d) of the Securities Act of 1933 (“Securities Act”),15 U.S.C. § 77t(d), and Section 21(d)(3) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78u(d)(3), for a total amount of $40,628.91.
Cimini also previously consented to: a permanent injunction prohibiting violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Exchange Act Rule 10b-5, 17 C.F.R. § 240.10b-5, and Section 5 of the Securities Act, 15 U.S.C. § 77e; a penny stock bar; an officer-and-director bar; the Commission’s entitlement to disgorgement and prejudgment interest, and to a civil money penalty pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3).
The Commission commenced this action by filing its complaint on May 22, 2008. The complaint alleged Cimini and other defendants participated in a fraudulent "pump and dump" scheme to evade the registration provisions of the federal securities laws and then sell purportedly unrestricted Global shares during a fraudulent promotional campaign.

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