SEC CHARGES GLAXOSMITHKLINE SUBSIDIARY WITH FRAUD

The following excerpt is from a e-mail sent out by the SEC:

"12/12/2011 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.

BIG, BIG BANK AND THE RIGGED BID

The following excerpt is from the SEC website:
“Washington, D.C., Dec. 8, 2011
The SEC alleges that Wachovia generated millions of dollars in illicit gains during an eight-year period when it fraudulently rigged at least 58 municipal bond reinvestment transactions in 25 states and Puerto Rico. Wachovia won some bids through a practice known as “last looks” in which it obtained information from the bidding agents about competing bids. It also won bids through “set-ups” in which the bidding agent deliberately obtained non-winning bids from other providers in order to rig the field in Wachovia’s favor. Wachovia facilitated some bids rigged for others to win by deliberately submitting non-winning bids.
Wachovia agreed to settle the charges by paying $46 million to the SEC that will be returned to affected municipalities or conduit borrowers. Wachovia also entered into agreements with the Justice Department, Office of the Comptroller of the Currency, Internal Revenue Service, and 26 state attorneys general that include the payment of an additional $102 million. The settlements arise out of long-standing parallel investigations into widespread corruption in the municipal securities reinvestment industry in which 18 individuals have been criminally charged by the Justice Department’s Antitrust Division.
“Wachovia won bids by playing an elaborate game of ‘you scratch my back and I’ll scratch yours,’ rather than engaging in legitimate competition to win municipalities’ business.” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
Elaine C. Greenberg, Chief of the SEC’s Municipal Securities and Public Pensions Unit, added, “Wachovia hid its fraudulent practices from municipalities by affirmatively assuring them that they had not engaged in any manipulative conduct. This settlement will result in significant payments to municipalities harmed by Wachovia’s unlawful actions.”
Wachovia Bank is now Wells Fargo Bank following a merger in March 2010.
When municipal securities are sold to investors, portions of the proceeds often are not spent immediately by municipalities but rather temporarily invested in municipal reinvestment products until the money is used for the intended purposes. These products are typically financial instruments tailored to meet municipalities’ specific collateral and spend-down needs, such as guaranteed investment contracts (GICs), repurchase agreements (repos), and forward purchase agreements (FPAs). The proceeds of tax-exempt municipal securities generally must be invested at fair market value, and the most common way of establishing that is through a competitive bidding process in which bidding agents search for the appropriate investment vehicle for a municipality.
According to the SEC’s complaint filed in U.S. District Court for the District of New Jersey, Wachovia engaged in fraudulent bidding of GICs, repos, and FPAs from at least 1997 to 2005. Wachovia’s fraudulent practices and misrepresentations not only undermined the competitive bidding process, but negatively affected the prices that municipalities paid for reinvestment products. Wachovia deprived certain municipalities from a conclusive presumption that the reinvestment instruments had been purchased at fair market value, and jeopardized the tax-exempt status of billions of dollars in municipal securities because the supposed competitive bidding process that establishes the fair market value of the investment was corrupted.
Without admitting or denying the allegations in the SEC’s complaint, Wachovia has consented to the entry of a final judgment enjoining it from future violations of Section 17(a) of the Securities Act of 1933 and has agreed to pay a penalty of $25 million and disgorgement of $13,802,984 with prejudgment interest of $7,275,607. The settlement is subject to court approval.
Financial institutions have now paid a total of $673 million in settlements resulting from the ongoing investigations into corruption in the municipal reinvestment industry. Others charged prior to Wachovia are:– The Securities and Exchange Commission today charged Wachovia Bank N.A. with fraudulently engaging in secret arrangements with bidding agents to improperly win business from municipalities and guarantee itself profits in the reinvestment of municipal bond proceeds.


Banc of America Securities LLC – $137 million settlement with SEC and other federal and state authorities on Dec. 7, 2010. UBS Financial Services Inc. – $160 million settlement with SEC and other federal and state authorities on May 4, 2011. J.P. Morgan Securities LLC – $228 million settlement with SEC and other federal and state authorities on July 7, 2011. In a related action to the Banc of America matter, the SEC today charged the firm’s former vice president and marketer Dean Pinard for his role in various improper bidding practices. Pinard is the beneficiary of a grant of conditional amnesty from criminal prosecution by the Department of Justice provided to Banc of America’s parent corporation. Pinard, who cooperated with the investigation, agreed to pay more than $40,000 to settle the SEC’s case without admitting or denying the findings. He is barred from association with any broker, dealer, investment adviser, municipal securities dealer, or municipal advisor.
The SEC’s investigation, which is continuing, has been conducted by Deputy Chief Mark R. Zehner and Assistant Municipal Securities Counsel Denise D. Colliers, who are members of the Municipal Securities and Public Pensions Unit in the Philadelphia Regional Office. The SEC thanks the other agencies with which it has coordinated this enforcement action, including the Antitrust Division of the U.S. Department of Justice, Federal Bureau of Investigation, Internal Revenue Service, Office of the Comptroller of the Currency, and 26 State Attorneys General.”

CHICAGO SETTLES WITH EPA AND DOG OVER UNTREATED SEWER DISCHARGES

The following excerpt is from the EPA website:

“CHICAGO (Dec. 14, 2011) – The U.S. Environmental Protection Agency (EPA), the Department of Justice (DOJ), and the State of Illinois announced a Clean Water Act (CWA) settlement with the Metropolitan Water Reclamation District of Greater Chicago (MWRD) to resolve claims that untreated sewer discharges were released into Chicago area waterways during flood and wet weather events. The settlement will safeguard water quality and protect people’s health by capturing stormwater and wastewater from the combined sewer system, which services the city of Chicago and 51 communities.

“This consent decree requires MWRD to invest in green roofs, rain gardens and other green infrastructure to prevent basement flooding in the neighborhoods that are most severely impacted by sewer overflows,” said EPA Region 5 Administrator Susan Hedman. “The enforceable schedule established by this consent decree will ensure completion of the deep tunnel and reservoir system to control untreated sewage releases into Chicago area rivers and Lake Michigan.”

“These much needed upgrades to Chicago’s sewer infrastructure will reduce combined sewage overflows and the public’s exposure to harmful pathogens,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “The use of innovative green infrastructure in the city’s urban core will reduce runoff and flooding, and improve the quality of the environment where people live.”

“This settlement mandates that MWRD make critical structural changes to improve the quality of Chicago’s waterways,” said Illinois Attorney General Lisa Madigan. “By requiring green infrastructure projects, the agreement will also help reduce runoff and flooding for Chicago area residents.”

Under the settlement, the Metropolitan Water Reclamation District (MWRD) will work to complete a tunnel and reservoir plan to increase its capacity to handle wet weather events and address combined sewer overflow discharges. The project will be completed in a series of stages in 2015, 2017 and 2029. The settlement also requires MWRD to control trash and debris in overflows using skimmer boats to remove debris from the water so it can be collected and properly managed, making waterways cleaner and healthier. MWRD is also required to implement a green infrastructure program that will reduce stormwater runoff in areas serviced by MWRD by distributing rain barrels and developing projects to build green roofs, rain gardens, or use pervious paving materials in urban neighborhoods. MWRD has also agreed to pay a civil penalty of $675,000.

Raw sewage contains pathogens that threaten public health, leading to beach closures and public advisories against fishing and swimming. This problem particularly affects older urban areas, where minority and low-income communities often live. Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of EPA’s National Enforcement Initiatives for 2011 to 2013. The initiative focuses on reducing discharges from sewer overflows by obtaining cities’ commitments to implement timely, affordable solutions to these problems, including the increased use of green infrastructure and other innovative approaches“.

REFINING COMPANY TO PAY $12 MILLION FOR OBSTRUCTON OF JUSTICE AND VIOLATING THE CLEAN AIR ACT

The following excerpt is from the EPA website:

“WASHINGTON — Pelican Refining Company LLC, was sentenced to pay $12 million for felony violations of the Clean Air Act and to obstruction of justice charges in federal court in Lafayette, La. announced Cynthia Giles, assistant administrator for the U.S. Environmental Protection Agency’s Office of Enforcement and Compliance Assurance, and Ignacia S. Moreno, assistant attorney general of the Environment and Natural Resources Division of the Department of Justice.

“Facilities have a responsibility to protect their employees and local residents by following our nation’s environmental laws,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "Corporations that choose to cut corners and ignore these critical safeguards will face significant consequences.”

“This corporation operated without even the most basic requirements of an environmental compliance plan and endangered the public and its own employees by implementing unsafe practices in violation of its permit and reporting requirements,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “Today's plea demonstrates that the Justice Department will continue to vigorously prosecute those who violate environmental and workplace safety laws.”

Pelican was sentenced to pay a $12 million penalty, which includes a $10 million criminal fine and $2 million in community service payments that will go toward various environmental projects in Louisiana, including air pollution monitoring. The criminal fine is the largest ever in Louisiana for violations of the Clean Air Act. Pelican is also prohibited from future operations unless it implements an environmental compliance plan, which includes independent quarterly audits by an outside firm and oversight by a court-appointed monitor.

In a joint factual statement filed in court, Pelican, headquartered in Houston, Texas, admitted that the company had knowingly committed criminal violations of its operating permit at the refinery located in Lake Charles, La. The violations were discovered during a March 2006 inspection by the Louisiana Department of Environmental Quality (LDEQ) and the Environmental Protection Agency (EPA), which identified numerous unsafe operating conditions. Pelican also pleaded guilty to obstruction of justice for submitting materially false deviation reports to LDEQ, the agency that administers the federal Clean Air Act in Louisiana.

Pelican admitted to the following:

 Pelican had no company budget, no environmental department and no environmental manager;

 In order to comply with a permit issued under the Clean Air Act, the refinery was required to use certain key pollution prevention equipment, but that equipment was either not functioning, poorly maintained, improperly installed, improperly placed into service and/or improperly calibrated;

 It was a routine practice for over a year to use an emergency flare gun to re-light the flare tower at the refinery designed to burn off toxic gasses and provide for the safe combustion of potentially explosive chemicals; because the pilot light was not functioning properly, employees would take turns trying to shoot the flare gun to relight the explosive gasses;

 Sour crude oil was stored in a tank that was not properly placed into service and remained in the tank after the roof sank;

 A caustic scrubber designed to remove hydrogen sulfide from emissions was bypassed;

 A continuous emission monitoring system (CEMS) designed to measure the hydrogen sulfide levels in refinery emissions was not working properly, and

 Pelican provided false information to the State of Louisiana and the State of Texas concerning the laboratory testing of asphalt.

Byron Hamilton, the Pelican vice-president who oversaw operations at the Lake Charles refinery since 2005 from an office in Houston, Texas pleaded guilty on July 6, 2011, to negligently placing persons in imminent danger of death and serious bodily injury as a result of negligent releases at the refinery. Hamilton faces up to one year in prison and a $200,000 fine for each of the two Clean Air Act counts. On Oct. 31, 2011, Pelican’s former asphalt facilities manager, Mike LeBleu, also pleaded guilty to a negligent endangerment charge under the Clean Air Act.  

The government’s investigation of the Pelican Refinery continues. Under the Crime Victims’ Rights Act, crime victims are afforded certain statutory rights, including the opportunity to attend all public hearings and provide input to the prosecution. Any person adversely impacted is encouraged to learn more about the case and the Crime Victims’ Rights Act or contact the Victim Witness Coordinator for the U.S. Attorney’s Office, Western District of Louisiana.

The criminal investigation is being conducted by the EPA Criminal Investigation Division in Baton Rouge and the Louisiana State Police, with assistance from the Louisiana Department of Environmental Quality. The case is being prosecuted by U.S. Attorney Stephanie Finley, Richard A. Udell, Senior Trial Attorney of the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice, Trial Attorney Christopher Hale with the Environmental Crimes Section“.

AFTERMARKET AUTO LIGHTS MANUFACTURER IS INDICTED FOR PRICE-FIXING

The following excerpt is from the Department of Justice website:
Wednesday, November 30, 2011
“Taiwan Aftermarket Auto Lights Manufacturer and Its Chairman Indicted for Participation in Price-Fixing Conspiracy
WASHINGTON – A federal grand jury in San Francisco returned a superseding indictment yesterday against a Taiwan aftermarket auto lights manufacturer, its U.S.-based subsidiary distributor and its chairman for participating in an international conspiracy to fix the prices of aftermarket auto lights, the Department of Justice announced. Aftermarket auto lights are incorporated into an automobile after its original sale, often as repairs following a collision or as accessories and upgrades. 

The one-count felony superseding indictment, filed today in U.S. District Court in San Francisco, charges that Eagle Eyes Traffic Industrial Co. Ltd., which is based in Tainan County, Taiwan, participated in a conspiracy to fix the prices of aftermarket auto lights in the United States and elsewhere from about July 2001 to about September 2008. The indictment also charges Eagle Eyes’ highest-ranking officer, Chairman Yu-Chu Lin, aka David Lin, for his participation in the conspiracy from about July 2001 to about September 2008. Lin is a resident of Taiwan. E-Lite Automotive Inc., Eagle Eyes’ U.S. subsidiary based in Chino, Calif., is also charged in the indictment for its participation in the conspiracy from about March 2006 to about September 2008. Today’s indictment supersedes an indictment filed on July 19, 2011, against the second-highest-ranking officer of Eagle Eyes, Vice Chairman Homy Hong-Ming Hsu.
“The Antitrust Division will continue to crack down on international price-fixing conspiracies that target U.S. businesses and consumers,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. 

According to the indictment, Eagle Eyes, E-Lite, Lin, Hsu and co-conspirators participated in a conspiracy in which the participants met and agreed to charge prices of aftermarket auto lights according to jointly determined formulas. The participants in that conspiracy issued list price announcements to customers in accordance with the jointly determined price structure, and collected and exchanged information on prices for the purpose of monitoring and enforcing adherence to the conspiracy. The department said that the conspirators met in Taiwan and the United States for their discussions.

Including Eagle Eyes, E-Lite and Lin, four companies and four individuals have been charged to date in connection with the department’s ongoing investigation into the aftermarket auto lights industry. On Nov. 15, 2011, Maxzone Vehicle Lighting Corp., a U.S. distributor of aftermarket auto lights, pleaded guilty and was sentenced to pay a $43 million criminal fine for its participation in the conspiracy. On Oct. 4, 2011, Sabry Lee (U.S.A.) Inc., a U.S. distributor of aftermarket auto lights, pleaded guilty and was sentenced to pay a $200,000 criminal fine for its participation in the conspiracy. On March 29, 2011, Polo Shu-Sheng Hsu, the former president and CEO of Maxzone, was sentenced to serve 180 days in prison and to pay a $25,000 criminal fine for his role in the conspiracy. Chien Chung Chen, aka Andrew Chen, the former executive vice president of Sabry Lee, pleaded guilty for his participation in the conspiracy on June 7, 2011. He is currently scheduled to be sentenced on July 17, 2012.

Eagle Eyes, E-Lite and Lin are charged with price fixing in violation of the Sherman Act which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and $100 million fine for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.”

FORMER EXECS AT FREDDIE MACK AND FANNIE CHARGED BY SEC WITH ALLEGED SECURITIES FRAUD

The following excerpt is from the Securities and Exchange Commission website:

“Washington, D.C., Dec. 16, 2011 — The Securities and Exchange Commission today charged six former top executives of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) with securities fraud, alleging they knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.

Fannie Mae and Freddie Mac each entered into a Non-Prosecution Agreement with the Commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability. Each also agreed to cooperate with the Commission's litigation against the former executives. In entering into these Agreements, the Commission considered the unique circumstances presented by the companies' current status, including the financial support provided to the companies by the U.S. Treasury, the role of the Federal Housing Finance Agency as conservator of each company, and the costs that may be imposed on U.S. taxpayers.

Three former Fannie Mae executives - former Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Fannie Mae's Single Family Mortgage business, Thomas A. Lund - were named in the SEC's complaint filed in U.S. District Court for the Southern District of New York.
The SEC also charged three former Freddie Mac executives — former Chairman of the Board and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook, and former Executive Vice President for the Single Family Guarantee business Donald J. Bisenius — in a separate complaint filed in the same court.
"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, Director of the SEC's Enforcement Division. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk on the company's books. All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country's investors."

The SEC is seeking financial penalties, disgorgement of ill-gotten gains with interest, permanent injunctive relief and officer and director bars against Mudd, Dallavecchia, Lund, Syron, Cook, and Bisenius. Both lawsuits allege that the former executives caused the federal mortgage firms to materially misstate their holdings of subprime mortgage loans in periodic and other filings with the Commission, public statements, investor calls, and media interviews. The suit involving the Fannie Mae executives also includes similar allegations regarding Alt-A mortgage loans. The suit against the former Fannie Mae executives alleges they made misleading statements — or aided and abetted others — between December 2006 and August 2008. The former Freddie Mac executives are alleged to have made misleading statements — or aided and abetted others - between March 2007 and August 2008.

The SEC's complaint against the former Fannie Mae executives alleges that, when Fannie Mae began reporting its exposure to subprime loans in 2007, it broadly described the loans as those "made to borrowers with weaker credit histories," and then reported — with the knowledge, support, and approval of Mudd, Dallavecchia, and Lund — less than one-tenth of its loans that met that description. Fannie Mae reported that its 2006 year-end Single Family exposure to subprime loans was just 0.2 percent, or approximately $4.8 billion, of its Single Family loan portfolio. Investors were not told that in calculating the Company's reported exposure to subprime loans, Fannie Mae did not include loan products specifically targeted by Fannie Mae towards borrowers with weaker credit histories, including more than $43 billion of Expanded Approval, or "EA" loans.
Fannie Mae's executives also knew and approved of the decision to underreport Fannie Mae's Alt-A loan exposure, the SEC alleged. Fannie Mae disclosed that its March 31, 2007 exposure to Alt-A loans was 11 percent of its portfolio of Single Family loans. In reality, Fannie Mae's Alt-A exposure at that time was approximately 18 percent of its Single Family loan holdings.

The misleading disclosures were made as Fannie Mae's executives were seeking to increase the Company's market share through increased purchases of subprime and Alt-A loans, and gave false comfort to investors about the extent of Fannie Mae's exposure to high-risk loans, the SEC alleged.

In the complaint against the former Freddie Mac executives, the SEC alleged that they and Freddie Mac led investors to believe that the firm used a broad definition of subprime loans and was disclosing all of its Single-Family subprime loan exposure. Syron and Cook reinforced the misleading perception when they each publicly proclaimed that the Single Family business had "basically no subprime exposure." Unbeknown to investors, as of December 31, 2006, Freddie Mac's Single Family business was exposed to approximately $141 billion of loans internally referred to as "subprime" or "subprime like," accounting for 10 percent of the portfolio, and grew to approximately $244 billion, or 14 percent of the portfolio, as of June 30, 2008.

The SEC's complaint alleges that Mudd violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5(b) and 13(a)14(a) thereunder, and Section 17(a)(2) of the Securities Act of 1933 (the "Securities Act"); and that Mudd aided and abetted Fannie Mae's violations of Sections 10(b) and 13(a) of the Exchange Act and Exchange Act Rules 10b-5(b), 12b-20, 13a-1, and 13a-13 thereunder. The SEC complaint also alleges that Dallavecchia violated Section 17(a)(2) of the Securities Act and aided and abetted Fannie Mae's violations of Sections 10(b) and 13(a) of the Exchange Act and Exchange Act Rules 10b-5(b), 12b-20, 13a-1, and 13a-13 thereunder. Finally, the SEC complaint alleges that Lund aided and abetted Fannie Mae's violations of Sections 10(b) and 13(a) of the Exchange Act and Exchange Act Rules 10b-5(b), 12b-20, 13a-1, and 13a-13 thereunder.
The SEC's complaint alleges that Syron and Cook violated Exchange Act Section 10(b) and Rule 10b-5(b) thereunder and Securities Act Section 17(a)(2); that Syron violated Exchange Act Rule 13a-14; and that Syron, Cook and Bisenius aided and abetted violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5(b), 12b-20 and 13a-13 thereunder.
The SEC's investigation of Fannie Mae was conducted by Senior Attorneys Natasha S. Guinan, Christina M. Marshall, Liban Jama, Mona L. Benach, and Associate Chief Accountant, Peter Rosario, under the supervision of Assistant Director Charles E. Cain, and Associate Director Stephen L. Cohen. Sarah Levine and James Kidney will lead the SEC's litigation efforts.”

CEMENT PLANT MANUFACTURER TO PAY OVER $1.4 MILLION TO RESOLVE CLEAN AIR VIOLATIONS CASE

The following excerpt is from an EPA e-mail:

“WASHINGTON – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) announced that CalPortland Company (CPC), a major producer of Portland cement and building materials in the United States, has agreed to pay a $1.425 million penalty to resolve alleged violations of the Clean Air Act at its cement plant in Mojave, Calif. In addition to the penalty, CPC will spend an estimated $1.3 million on pollution controls that will reduce harmful emissions of nitrogen oxides (NOx) and sulfur dioxide (SO2), pollutants that can lead to childhood asthma and smog.

“Air pollution from cement plants can travel significant distances downwind, crossing state lines and creating region-wide air quality and health problems,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement will ensure the proper pollution controls are installed to reduce emission levels and protect communities across the Southwest.”

“This settlement will bring state of the art controls to a major source of air pollution and secures significant reductions in harmful pollutants,” said Ignacia S. Moreno, assistant attorney general for the Environment and Natural Resources Division of the Department of Justice. “The Mojave plant is one of the largest emitters of nitrogen oxide pollution in California. As a result of the Clean Air Act compliance requirements in the consent decree, residents in the surrounding region will enjoy cleaner and healthier air.”

The $1.425 million penalty is one of the largest settlements for a single cement facility. The plant is located in Kern County, Calif., which has some of the worst air pollution in the country. The pollutants covered in the settlement contribute to the formation of ground-level ozone, or smog. Exposure to even low levels of ozone can cause respiratory problems, and repeated exposure can aggravate pre-existing respiratory diseases.

The government’s complaint alleges that CPC made significant modifications to its plant, resulting in increased emissions of NOx, SO2 and carbon monoxide, without first obtaining a Clean Air Act-required permit and without installing necessary pollution control equipment. Major sources of air pollution are required to obtain such permits before making changes that would result in a significant emissions increase of any pollutant.

The settlement ensures that the proper equipment, estimated to cost $1.3 million to install and $500,000 per year to operate, will be installed to reduce future emission levels. These measures are expected to reduce pollution each year from the plant by at least 1,200 tons of NOx and 360 tons of sulfur dioxide SO2.

Since 2005, EPA has been focusing on improving compliance with the new source review provisions of the Clean Air Act among industries that have the potential to cause significant amounts of air pollution, including the cement manufacturing industry.

EPA is continuing its commitment to reducing air pollution from cement plants by making it one of the National Enforcement Initiatives for 2011-2013. Sulfur dioxide and nitrogen oxides, two key pollutants emitted from cement plants, are converted in the air into fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death. Reducing these harmful air pollutants will benefit the communities located near the CalPortland facility, particularly communities disproportionately impacted by environmental risks and vulnerable populations, including children.

The proposed consent decree will be lodged with the U.S. District Court for the Eastern District of California, and will be subject to a 30-day public comment period.”