Adviser Violates Investment Advisers Act for Failing to Disclose Deteriorating Financial Condition
12.29.2006 Veritas Financial Advisors, LLC, Veritas Advisors, Inc., and Patrick J. Cox settled with the SEC in an action where they were alleged to have fraudulently misappropriated client funds totaling
more than $1,200,000. The SEC found that both Veritas
entities, which were controlled by Cox, fraudulently failed to
disclose their precarious financial condition to their advisory
clients and did not maintain certain required books and records for
investment advisers, and that Veritas Advisors failed to maintain
proper custody of client assets and failed to maintain its
registration with the Commission as an investment adviser after its
registration lapsed. Pursuant to the SEC order, both Veritas entities were censured for their respective willful violations of the
securities laws, and Veritas Financial's registration as an investment
adviser was revoked. Further, Cox was barred from association with any
investment adviser and has been ordered to pay a civil monetary
penalty in the amount of $120,000.
Please click http://www.sec.gov/litigation/admin/2006/34-55021.pdf to access a copy of the administrative order.
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Government Agencies Announce Latest Initiatives to Combat Identity Theft
12.28.2006 The President's Identity Theft Task Force announced that it is seeking
public comment on various possible recommendations to improve the
effectiveness and efficiency of the federal government's efforts to
reduce identity theft. The Task Force is chaired by Attorney General
Alberto R. Gonzales and co-chaired by Federal Trade Commission
Chairman Deborah Platt Majoras and participants include the SEC and other federal agencies. It was formed in May, 2006 to develop a comprehensive strategy for steps the federal government can take to combat identity theft.
The Task Force is preparing to produce a final strategic plan to the President. The
Task Force is considering, among other things, various ways to improve
the coordination and effectiveness of criminal prosecution of identity
theft, to enhance data protection for sensitive consumer information
maintained by the public sector, private sector, and the consumer
himself or herself, and to provide more comprehensive and effective
guidance for consumers and the business community. The Task Force also
is considering ways to improve recovery and assistance for consumers
following a breach or misuse of their information.
In September 2006, the Task Force issued interim recommendations to
the President which will improve the ability of the government and the
private sector to bring identity thieves to justice, to mitigate the
risks of identity theft for individuals and companies, and to assist
identity-theft victims in recovering from the effects of this
pernicious crime.
Please click http://www.usdoj.gov/ittf/ For a summary of issues being considered by the Task Force.
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Deutsche Bank Securities, Inc. Settles Late Trading and Market Timing Charges
12.21.2006 Deutsche Bank Securities, Inc. (DBSI), a subsidiary of Deutsche Bank AG, settled late trading and market timing charges brought by the SEC. The SEC order found between March 2003 and September 2003, a
that a registered representative (RR) at DBSI defrauded mutual funds by engaging
in deceptive practices designed to mislead mutual funds as to the
identity of his customers. For example, various mutual funds
identified the RR's customers as market timers, and funds rejected the
customers' trades. In response, the RR opened new accounts for the
customers and then executed trades for the customers in the same
mutual funds that had rejected the customers' trades. The RR opened
the new accounts to conceal the true identity of his customers and to
mislead certain mutual funds into believing that the trades were
coming from other DBSI customers, whose trading the funds had not
blocked. In addition, the RR entered late trades for at least one
customer. The RR received and entered orders to purchase, redeem, or
exchange mutual fund shares after the 4:00 p.m. Eastern Time market
close, but entered the orders as if they had been received prior to
4:00 p.m. This enabled the customer to receive the share price based
on the prior net asset value (NAV) determined as of 4:00 p.m.
Specifically, the RR entered the late trades on occasions when fund
companies identified the customer as a market timer and blocked the
customer's original orders, and the customer would then select another
mutual fund in which to place trades, which often occurred after 4:00
p.m. ET. This conduct violated Rule 22c-1(a) adopted pursuant to
Section 22(c) of the Investment Company Act.
The SEC entered a separate order against against Deutsche Asset Management, Inc. (DAMI) and Deutsche Investment
Management Americas, Inc. (DIMA). That order found that from approximately late 1997 through March 2003,
DAMI and DIMA two registered investment advisory subsidiaries of
Deutsche Bank AG (Deutsche Bank) allowed certain investors to engage
in short-term trading in a manner inconsistent with the respective
mutual funds' prospectus disclosures, and also failed to disclose
these market timing arrangements to the funds' trustees. Specifically,
from July 2000 through March 2003, DAMI entered into a "sticky asset"
arrangement with a hedge fund.
Please click http://www.sec.gov/litigation/admin/2006/34-54993.pdf to access a copy of the administrative order.
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SEC Issues Release Propsing New Hedge Fund Rules
12.19.2006 The SEC has issued a release
proposing new rules designed to provide additional investor protections
with respect to hedge funds and other pooled investment vehicles. The two rule proposals respond to the court's ruling in Goldstein v. SEC, 451 F.3d 873 (D.C. Cir. 2006), which struck down the SEC's hedge fund manager registration rule. The SEC proposed an antifraud rule and an amendment to Regulation D under the Securities Act of 1933 to increase the net worth requirement to meet the definition of an "accredited investor."
The court in Goldstein ruled that the "client" of an investment
adviser managing a hedge fund is the fund itself, not the fund's
investors. The court's ruling raised the question of whether the antifraud provisions of Sections 206(1) and 206(2) of the Investment
Advisers Act of 1940, which prohibit frauds upon clients and prospective
clients, would apply in cases where an adviser has defrauded investors in a hedge
fund. The SEC proposes to address this issue
by adopting an antifraud rule under Section 206(4) of the Advisers Act,
which gives the SEC broad authority to adopt rules to prevent fraud and
is not limited to frauds upon clients and prospective clients.
Proposed Rule 206(4)-8 would forbid investment advisers to make
material misstatements and omissions, or to engage in any other act,
practice, or course of business that is fraudulent, deceptive, or
manipulative, with respect to any investor or prospective investor in a hedge fund. Besides hedged funds, other pooled investment vehicles that would be covered by the rule are all investment
companies, as well as companies that would be investment companies but
for Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act of
1940 (the provisions relied on by hedge funds, private equity funds, and
other private investment companies). Rule 206(4)-8 would apply to federally registered
investment advisers and state-registered and unregistered
advisers.
Unlike Rule 10b-5, Rule 206(4)-8 would not be limited to fraud
in connection with the purchase and sale of a security, and the SEC
would not need to demonstrate that an adviser violating the rule acted
with scienter. The rule would prohibit false or misleading statements
made, for example, to existing investors in account statements as well
as to prospective investors in private placement memoranda or responses
to requests for proposals. The SEC gives examples of the statements
that the rule would prohibit:
- materially false or misleading
statements regarding investment strategies the pooled investment vehicle
will pursue (including strategies the adviser may pursue for the pool in
the future),
- the experience and credentials of the adviser (or its
associated persons),
- the risks associated with an investment in the
pool,
- the performance of the pool or other funds advised by the adviser,
- the valuation of the pool or investor accounts in it, and
- practices the adviser follows in the operation of its advisory business such as how
the adviser allocates investment opportunities.
The SEC proposed to amend Regulation D under the Securities
Act of 1933 to set a higher net worth requirement for accredited investors who buy
shares of private investment vehicles in private placements. Regulation D
provides a safe harbor for private placements to an unlimited number of
accredited investors, plus up to 35 non-accredited but sophisticated
investors. For individuals, an "accredited investor" is a natural
person whose individual net worth, or joint net worth with his or her
spouse, exceeds $1 million at the time of purchase, or whose individual
income exceeds $200,000 (or joint income with the person's spouse
exceeds $300,000) in each of the two most recent years and who has a
reasonable expectation of reaching the same income level in the year of
investment. These standards were adopted in 1982 and, except for the
adoption of the $300,000 joint income standard in 1988, have not been
revised since then.
Proposed new Rule 509 would set a higher standard for accredited
natural persons who invest in private investment vehicles. In addition
to the existing standard, an accredited natural person would be required
to own (individually, or jointly with that person's spouse) not less
than $2.5 million in investments. The dollar threshold would be
adjusted for inflation every five years.
The SEC estimates that
approximately 1.3% of U.S. households would qualify for accredited
natural person status, a sharp reduction from the estimated 8.47% of
households that qualified for accredited investor status in 2003. This
percentage would also be less than the estimated 1.87% of U.S.
households that qualified for accredited investor status in 1982. The
SEC, which apparently forgets how novel and complex these investment
vehicles were in the 1980s, says it believes that this result is
appropriate given the increasing complexity of financial products, in
general, and hedge funds, in particular, over the past decade.
Non-accredited natural persons still could purchase under the provision
for up to 35 non-accredited investors, although many issuers refuse to
allow any non-accredited investors.
The SEC asks for comment specifically on the following points:
- The proposed rules would not grandfather current accredited
investors who would not meet the new accredited natural person standard
so that they could make future investment in the hedge fund in
which they are already invested; and
- would not provide any special standard for employees of private investment vehicles or their investment advisers.
Please click http://www.sec.gov/rules/proposed/2006/33-8766.pdf to access a copy of the proposing release.
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SEC and Bank Regulatory Agencies Proposed New Broker Push-Out Regulations
12.18.2006 The SEC announced that it, and the Federal Reserve Board of Governors, have released joint proposed rules to implement the "broker" exceptions for banks under Section 3(a)(4) of the 1934 Act. These exceptions were adopted as part of the Gramm-Leach-Bliley Act of 1999 (GLB Act).
The proposed rules define the scope of securities activities that banks may conduct without registering with the SEC as a securities broker and would implement the "broker" exceptions for banks adopted by the GLB Act. Specifically, the proposed rules would implement the statutory exceptions that allow a bank, subject to certain conditions, to continue to conduct securities transactions for its customers as part of the bank's trust and fiduciary, custodial and deposit "sweep" functions, and to refer customers to a securities broker-dealer pursuant to a networking arrangement with the broker-dealer.
Bank Broker-Dealer Exemption.The SEC extended the exemption for banks from the definition of
"broker" until July 2, 2007.
Bank Broker-Dealer Networking Arrangements.The proposed rules would
define certain statutory terms in the areas of third-party brokerage
("networking"), trust and fiduciary activities, safekeeping and
custody, and sweep accounts. They also would provide banks with
conditional exemptions to accommodate certain limited bank securities
activities. In addition, the proposal would provide banks with an
exemption from possible third-party rescission rights for acting as an
unregistered broker, as well as a related transitional exemption. 1.
Networking Exception. The networking exception allows banks to refer
bank customers to broker-dealers in exchange for a share of the
commissions earned from the customers' accounts. The Exchange Act
provides that banks may pay unregistered employees "nominal" incentive
compensation for making these referrals. The proposed rules would
define "nominal," "incentive compensation," and certain other terms.
To accommodate banks' customary bonus plans, the definition of
"incentive compensation" would specifically exclude qualifying
discretionary compensation paid under these bonus plans. The proposal
also would allow banks to pay more than nominal fees for referrals of
certain institutional customers and high net worth customers to a
broker or dealer, if the bank and broker-dealer satisfy conditions to
protect these customers.
Trust and Fiduciary Activities Exception. Banks by statute have a trust and fiduciary exception that recognizes the traditional securities role banks have performed for trust and fiduciary customers and includes conditions to help ensure that a bank does not operate a securities broker in the trust department. The trust and fiduciary
activities exception permits a bank to effect securities transactions
in a trustee or fiduciary capacity if it is "chiefly compensated" for
those transactions, consistent with fiduciary principles and
standards, on the basis of specifically enumerated types of fees. The
proposed rules refer to these fees collectively as "relationship
compensation," which would include a broad range of administration
fees, as well as fees paid by investment companies.
To determine whether it is "chiefly compensated" by relationship
compensation, a bank would conduct an account-by-account review using
a two-year rolling average comparison of the fees from the account.
Alternatively, banks are permitted to compare relationship
compensation to total aggregate compensation on a bank wide basis
using a two-year rolling average comparison. Banks can exclude from
the compensation comparison some unusual accounts (such as accounts
acquired as part of a business combination or asset acquisition for 12
months).
The proposed rules also address the advertising restrictions placed on banks by the Securities Exchange Act of 1934. The proposed rules provide that a bank complies with the advertising restriction if advertisements by or on behalf of the bank do not advertise that the bank provides securities brokerage services for trust or fiduciary accounts except as part of advertising the bank’s broader trust or fiduciary services, and do not advertise the securities brokerage services provided by the bank to trust or fiduciary accounts more prominently than the other aspects of the trust or fiduciary services provided to such accounts
Sweep Accounts and Transactions in Money Market Funds. The sweep
accounts exception permits a bank to sweep deposits into no-load,
money market funds. The proposed rules would define terms used in the
sweep accounts exception, and would provide banks with a conditional
exemption for transactions in money market funds that are not no-load
as well as for transactions that are not sweeps. A bank relying on
this exemption for transactions involving funds that are not no-load
would have to provide the customer with a prospectus showing the
fund's fees, and could not characterize the fund shares as no-load.
Proposed Exemption for Banks To Effect Transactions in Investment
Company Securities. The proposal would include an exemption that would
permit banks to effect mutual fund transactions through the National
Securities Clearing Corporation's Mutual Fund Services (Fund/SERV) or
directly with a transfer agent.
The proposed rules also includes an exemption for the way in which banks may effect transactions in investment company securities. Under the proposal, a bank that meets the conditions for an exception or exemption from the definition of “broker” except for the condition in Section 3(a)(4)(C)(i) of the Exchange Act, which requires banks, under certain circumstances, to direct securities transactions to a registered broker-dealer for execution, is exempt from such condition to the extent that the bank effects transactions in securities issued by an open-end company that is neither traded on a national securities exchange nor through the facilities of a national securities association or an interdealer quotation system if certain conditions are met. In particular, the proposed exemption would allow a bank to effect such transactions through the National Securities Clearing Corporation’s Mutual Fund Services (Fund/SERV) or directly with a transfer agent acting securities lending transactions (and provide related securities lending services) with respect to such securities as agent under the statutory custody and safekeeping exception. Under the proposed exemption, the securities would have to be distributed by a registered broker-dealer, or, in the alternative, the sales charge for the transaction would have to be no more than the amount a registered broker-dealer could charge pursuant to the rules of a registered securities association adopted pursuant to Section 22(b)(1) of the Investment Company Act of 1940.
Safekeeping and Custody. The safekeeping and custody exception
would permit banks to perform specified services in connection with
safekeeping and custody of securities. Under the proposed exemption,
banks can take orders for securities transactions from employee
benefit plan accounts and individual retirement and similar accounts
for which the bank acts as a custodian, as well as from other
safekeeping and custody accounts on an accommodation basis. If a bank
accepts securities orders under the proposed exemption with respect to
a custody account, no bank employee may receive compensation from the
bank, the executing broker or dealer, or any other person that is
based on whether a securities transaction is executed for the account,
or on the quantity, price, or identity of the securities purchased or
sold by the account.
Additional conditions would apply when a bank accepts securities
orders for a custodial account on an accommodation basis. In
particular, the bank can not advertise securities order-taking,
provide investment advice or research or make recommnedations
concerning securities to the account or otherwise solicit securities
transactions from the account. In addition, the bank's charges for
effecting a securities transaction for the account can not vary based
on whether the bank accepted the order for the transaction, or on the
quantity or price of the securities to be bought or sold.
Securities Lending Exemption. The proposal would repropose an
exemption for banks from the definition of broker for noncustodial
securities lending activities. This exemption would reinstate a rule
that would otherwise be voided by the Regulatory Relief Act. The
existing rule was adopted as a part of the bank dealer rules and
included exemptions for banks' brokerage activities associated with
noncustodial securities lending.
Regulation S Securities Exemption. The proposal would include an
exemption for banks from the definition of broker for agency
transactions in Regulation S securities with non-U.S. persons. The
Commission originally proposed this rule in 2004.
Please click http://www.sec.gov/rules/proposed/2006/34-54946.pdf to access a copy of the release proposing the rules.
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SEC Reopens Comment Period for Fund Governance Rules
12.15.2006 The SEC reopenned the comment period on its June 2006 request for comment regarding amendments to investment company governance provisions. The purpose of the additional comment period is to permit public comment on two papers prepared by the Office of Economic Analysis on this topic that will be made public by including them in the comment file.
In June 2006, the SEC requested additional comment1 regarding amendments to fund governance provisions of rules under the Investment Company Act. It received numerous comments, some of which provided information on the costs of the provisions. In the SEC's view, few directly addressed in a meaningful way the economic implications of the provisions. Before considering further rulemaking on this matter, the SEC is seeking more comments so that it has a more comprehensive record and a more thorough understanding of the economic consequences of the provisions.
Comments must be received on or before 60 days after publication of the second of the two staff economic papers in the public comment file. When the second of the two staff economic papers in the public comment file is published, the SEC will publish a document announcing the comment deadline.
Please click http://www.sec.gov/rules/proposed/2006/ic-27600.pdf to access a copy of the SEC release.
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SEC Adopts Proxy Rule Amendments
12.13.2006 The SEC voted to adopt amendments to its proxy rules that would allow companies to furnish proxy materials to shareholders through a “notice and access” model using the Internet. The SEC also voted to propose rule changes that would require companies and soliciting persons to follow the notice and access model for all solicitations not related to a business combination transaction in the future.
Under the amended rule, a company may, but is not required to, furnish proxy materials to shareholders through a “notice and access” model. A company choosing to follow the model must post its proxy materials on an Internet Web site and send a notice of Internet Availability of Proxy Materials to shareholders at least 40 days before the meeting date. A proxy card may not accompany the Notice. However, a company may send a paper proxy card accompanied by another copy of the Notice 10 days or more after sending the initial the notice.
The notice must be:
- written in plain English;
- contain a prominent legend that advises shareholders of the date, time, and location of the meeting, the availability of the proxy materials at a specified Web site address, a toll-free phone number, e-mail address and a website that shareholders may use to request copies of the proxy materials; and
- contain a clear and impartial description of the matters to be considered at the meeting.
The company must send a copy of the materials within three business days after receiving a request from a shareholder. A shareholder may make a permanent election to receive all proxy materials in paper or by e-mail with respect to future proxy solicitations conducted by the company or soliciting person.
When a company or soliciting party chooses to rely on the notice and access model, brokers, banks and similar intermediaries must prepare and send their own Notices designed for beneficial shareholders. A beneficial shareholder desiring a paper or e-mail copy of the proxy materials must request one from the intermediary.
A soliciting person other than the company may follow the notice and access model in substantially the same manner as a company. However, its Notice must be sent to shareholders by the later of 40 days before the meeting or 10 days after the company filed its proxy materials. It may limit its solicitation to shareholders who have not previously requested paper or e-mail copies. But if the soliciting person sends a Notice to a shareholder, it must send that shareholder a paper or e-mail copy upon request.
The compliance date for the amendments is July 1, 2007. No person may comply with the notice and access model before that date.
Please click http://www.sec.gov/news/press/2006/2006-209.htm to access a copy of press release announcing the adopted rule.
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SEC Enforcement Director Testifies About Insider Trading Involving Hedge Funds
12.5.2006 Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, testified before the U.S. Senate Committee on the Judiciary about insider trading involving hedge funds. She stated that insider trading by hedge funds remains a substantial concern to the Enforcement Division, and represents a significant focus of its current enforcement efforts. In her testimony, she discussed the process Enforcement follows in bringing insider trading cases in general, and also spoke about several cases involving insider trading by hedge funds.
She reviewed the three key legal requirements that must be met for the SEC to bring a civil insider trading case, which are:
- access to material, non-public information;
- scienter (or culpable intent); and
- breach of a duty to the source of the information.
She testified that investigating potential insider trading by hedge funds presents additional challenges because of their high volume trading and proprietary trading strategies. Because they often have substantial assets under management, hedge funds may place extremely large trades in many different securities on a daily basis. The huge volume of trading by hedge funds across a broad range of securities may generate any number of transactions that appear to be unusual or suspicious, but for some hedge funds these trades may be typical.
She also stated that to develop an accurate composite view of a hedge fund's trading in a particular security, it may be necessary to review records from all of its prime brokers. The prime brokers provide the SEC with a window into the trading activities of the hedge funds they serve, but it is admittedly a limited window. While a prime broker has information about the transactions it performs for a hedge fund, it generally has little information about activities the hedge fund may be conducting through other prime brokers. She testified that the Enforcement Division remains optimistic about prime brokers as a source of leads regarding unlawful insider trading.
Director Thomsen also discussed the SEC's investigation of potential insider trading by Pequot.
Please click http://www.sec.gov/news/testimony/2006/ts120506lct.pdf to access a copy of her testimony.
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OCIE Director Speaks on CCOutreach and Adviser Annual Reviews
12.5.2006 Lori A. Richards, Director of the Office of Compliance Inspections and Examinations (OCIE) of the SEC spoke in Washington, D.C. at the Investment Company Institute's 2006 Securities Law Developments conference about the CCOutreach and investment adviser annual review process.
With respect to the CCOutreach program, she stated that it is designed to provide a forum for SEC staff and industry compliance officers to discuss compliance issues in a practical way, to share experiences, and to learn about effective compliance practices. She noted that the program is sponsored by both the SEC's Division of Investment Management and OCIE and this reflects the philosophy of the program -- we (the IM and OCIE staff) mean to marry the legal requirements of the securities laws and rules with their practical application in compliance programs.
Please click http://www.sec.gov/litigation/admin/2006/ia-2566.pdf to access a copy of the administrative order.
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IM Director Lists Division Priorities for 2007
12.4.2006 Andrew "Buddy" Donohue, Director of the SEC's Division of Investment Management, spoke in Washington, D.C. at the Investment Company Institute's 2006 Securities Law Developments conference about his Division's priorities in 2007.
Director Donohue listed two top priorities:
- Mutual Fund Disclosure Reform and Interactive Data: the SEC staff have initiated a disclosure reform project that makes increased use of technological capabilities, particularly interactive data. The staff's work on disclosure reform may lead the Division to recommend a short-form disclosure document. One goal of an interactive data system is to enable fund investors, the intermediaries who help them evaluate funds and others to have access to more detailed fund information-in a more accessible, user-friendly and automated fashion than is available today.
- Exemptive Applications Processing: he noted that the efficiency of the processing of exemptive applications in the Division of Investment Management has been frequently criticized by the fund industry and industry observers. He then discussed some of the steps that the SEC staff has been taking to improve the efficiency of the processing of exemptive applications.
He also spoke about the fiduciary culture of the fund industry.
Please click http://www.sec.gov/news/speech/2006/spch120406ajd.htm to access a copy of the speech.
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SEC Issues CCOutreach Schedule and Possible Meeting Topics
12.4.2006 The SEC announced that the schedule for the next series of the CCOutreach Regional Seminars. The seminars will be held in April, May and June of 2007.
Possible topics for the seminars include, but are not limited to
- the examination process;
- the risk assessment process;
- portfolio management;
- brokerage arrangements, best execution and trade allocation;
- personal securities transactions;
- pricing and valuation;
- books and records;
- disclosures and filings;
- marketing, performance advertising and distribution; and
- safety of client assets.
Please click http://www.sec.gov/news/press/2006/2006-199.htm to access a copy of the press release announcing the schedule.
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Broker Settles Charges Relating to Alleged Excessive Gifts and Entertainment Provided to Mutual Fund Traders for Brokerage Business
12.1.2006 The SEC charged Jefferies & Co., Inc., a registered broker-dealer, and two executives in connection with
approximately $2 million worth of lavish gifts, extravagant travel and
entertainment and other illegal gratuities to win mutual fund trading
business. Jefferies, its Director of Equities, Scott Jones, and Kevin
Quinn, the firm's former Senior Vice President and equity sales
trader, have agreed to the SEC's institution of settled
enforcement proceedings.
The SEC issued an Order that finds that, in May 2002, Jefferies
hired Quinn to increase Jefferies' brokerage business with a family of
mutual funds managed by an adviser with which Quinn had a pre-existing
relationship. To retain Quinn as an expected rainmaker, the firm gave
him a highly lucrative compensation package that included a $1.5
million annual travel and entertainment budget, which Quinn used to
lavish travel, entertainment and gifts on a handful of the fund
adviser's most successful equity traders and the adviser's head of
equity trading. The SEC's order finds Quinn aided and abetted
the violations of the fund adviser's employees, and that Jefferies and
Jones failed to supervise Quinn's misconduct.
According to the SEC's order, Quinn provided the traders with
expensive golf trips, flew them on private jets, lodged them at fancy
hotels, and showered them with golf merchandise and other presents. On
certain occasions, he also made private jets available to them to take
on personal trips without his attendance. Quinn also gave these same
traders tickets to major sporting events, Broadway shows, and
concerts, again without his attendance, and even helped pay for one
trader's elaborate bachelor party in Miami. The SEC's order
further finds that Jones, Quinn's primary supervisor, approved
numerous expense vouchers that reflected inappropriate expenditures on
behalf of the traders. The illegal conduct occurred between May 2002
and October 2004.
Please click http://www.sec.gov/litigation/admin/2006/34-54861.pdf to access a copy of the administrative order.
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