The following is an excerpt from the Department of Justice website:
“WASHINGTON — Hitachi-LG Data Storage Inc. has agreed to plead guilty and to pay a $21.1 million criminal fine for its participation in a series of conspiracies to rig bids and fix prices for the sale of optical disk drives, the Department of Justice announced today. This is the department’s first charge resulting from its ongoing investigation into the optical disk drive industry.
A 15-count felony charge was filed today in U.S. District Court in San Francisco against Hitachi-LG Data Storage, a joint venture between Hitachi Ltd., a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation. Of the 14 counts, seven charge Hitachi-LG Data Storage with conspiring with others to suppress and eliminate competition by rigging bids on optical disk drives sold to Dell Inc.; six counts charge Hitachi-LG Data Storage with rigging bids on optical disk drives sold to Hewlett-Packard Company (HP); and one count charges Hitachi-LG Data Storage with conspiring with others to fix the prices of optical disk drives sold to Microsoft Corporation. The final count charges Hitachi-LG Data Storage for its participation in a scheme to defraud HP in an April 2009 optical disk drive procurement event.
“The bid-rigging and price-fixing conspiracies involving optical disk drives undermined competition and innovation in the high tech industry,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division is committed to prosecuting those who harm competition in the optical disk drive industry.”
Under the plea agreement, which is subject to court approval, Hitachi-LG Data Storage has agreed to assist the department in its ongoing investigation into the optical disk drive industry.
Optical disk drives are devices such as CD-ROM, CD-RW (ReWritable), DVD-ROM and DVD-RW (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.
According to the court document, Dell hosted optical disk drive procurement events in which bidders would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. From approximately June 2004 to approximately September 2009, Hitachi-LG Data Storage and co-conspirators participated in a series of conspiracies involving meetings and conversations to discuss bidding strategies and the prices of optical disk drives. As part of the conspiracies, Hitachi-LG Data Storage and co-conspirators bid on optical disk drives at collusive and noncompetitive prices and exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.
The department said that from approximately June 2007 to approximately March 2008, Hitachi-LG Data Storage and co-conspirators participated in meetings and conversations in Taiwan and the Republic of Korea to discuss and fix the prices of optical disk drives sold to Microsoft. As part of the conspiracy, Hitachi-LG Data Storage and co-conspirators issued price quotations in accordance with the agreements reached and exchanged information on the sales of optical disk drives to monitor and enforce adherence to the agreed-upon prices.
According to the court document, HP also hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. The department said that from approximately November 2005 to approximately March 2009, Hitachi-LG Data Storage and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine pricing and rank order, and submitted collusive and noncompetitive bids for the procurement event.
Hitachi-LG Data Storage is also charged with one count of wire fraud for devising a scheme to subvert HP’s competitive bidding process for an April 2009 procurement event. According to the charge, Hitachi-LG Data Storage executed the scheme through interstate communications, including an email sent by one of its employees to co-conspirators in San Jose, Calif., and the Republic of Korea, that contained first round bidding results and non-public, competitively sensitive information relating to the April 2009 event.
Hitachi-LG Data Storage is charged with multiple violations of the Sherman Act and one violation of the wire fraud statute. Sherman Act violations carry a maximum penalty of a $100 million criminal fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims, if either of those amounts is greater than the statutory maximum fine. The wire fraud violation carries a maximum penalty of the greatest of a $500,000 fine, twice the gain a person derived from the offense or twice the loss suffered by the victims.”
Saturday, October 8, 2011
CONGO CONFLICT MINERALS TO BE DISCUSSED AT SEC ROUNDTABLE OCTOBER 18, 2011
The following is an excerpt from an SEC e-mail:
“Washington, D.C., Sept. 29, 2011 — The Securities and Exchange Commission today announced that it will host a public roundtable next month to discuss the agency’s required rulemaking under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which relates to reporting requirements regarding conflict minerals originating in the Democratic Republic of the Congo and adjoining countries.
The event will take place on October 18 from 12:30 p.m. to 5:15 p.m. and will provide a forum for various stakeholders to exchange views and provide input on issues related to the SEC’s required rulemaking. The panel discussions will focus on key regulatory issues such as appropriate reporting approaches for the final rule, challenges in tracking conflict minerals through the supply chain, and workable due diligence and other requirements related to the rulemaking.
“We are committed to writing an effective rule as soon as possible, and the roundtable will help us do that,” said Meredith Cross, Director of the SEC’s Division of Corporation Finance.
Roundtable panelists are expected to reflect the views of different constituencies, including affected issuers, human rights organizations, and other stakeholders. A final agenda including a list of participants will be announced closer to the date of the roundtable.
The roundtable will be held in the auditorium at the SEC’s headquarters at 100 F Street NE in Washington D.C. The roundtable will be open to the public with seating on a first-come, first-served basis, and the discussion also can be viewed via live webcast on the SEC website.”
The following is an excerpt from an SEC e-mail:
“Washington, D.C., Sept. 29, 2011 — The Securities and Exchange Commission today announced that it will host a public roundtable next month to discuss the agency’s required rulemaking under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which relates to reporting requirements regarding conflict minerals originating in the Democratic Republic of the Congo and adjoining countries.
The event will take place on October 18 from 12:30 p.m. to 5:15 p.m. and will provide a forum for various stakeholders to exchange views and provide input on issues related to the SEC’s required rulemaking. The panel discussions will focus on key regulatory issues such as appropriate reporting approaches for the final rule, challenges in tracking conflict minerals through the supply chain, and workable due diligence and other requirements related to the rulemaking.
“We are committed to writing an effective rule as soon as possible, and the roundtable will help us do that,” said Meredith Cross, Director of the SEC’s Division of Corporation Finance.
Roundtable panelists are expected to reflect the views of different constituencies, including affected issuers, human rights organizations, and other stakeholders. A final agenda including a list of participants will be announced closer to the date of the roundtable.
The roundtable will be held in the auditorium at the SEC’s headquarters at 100 F Street NE in Washington D.C. The roundtable will be open to the public with seating on a first-come, first-served basis, and the discussion also can be viewed via live webcast on the SEC website.”
Friday, October 7, 2011
SEC CHARGES INVESTMENT ADVISER WITH PIPE TRANSACTION FRAUD
The following excerpt is from the SEC website:
“Washington, D.C., Sept. 28, 2011 — The Securities and Exchange Commission today charged a Long Island-based investment adviser with defrauding investors in hedge funds investing in PIPE transactions and misappropriating more than $1 million in client assets for his personal use.
The SEC alleges that Corey Ribotsky and his firm The NIR Group LLC repeatedly lied to investors to hide the truth that his PIPE investment and trading strategy was failing during the financial crisis. For example, Ribotsky falsely told investors that despite the adverse market conditions he could liquidate all of the PIPE investments in 36 to 48 months — a practical impossibility given the size of the investments. Meanwhile, Ribotsky misused investor money by writing checks to pay for personal services and such luxury items as a Lexus, Mercedes, and Rolex watch.
“In a classic betrayal of trust, Ribotsky stole from his investors and falsely assured them that his struggling hedge funds were thriving,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This enforcement action reflects our continuing commitment to bring to justice individuals and companies that committed fraud during the credit crisis.”
A “PIPE” transaction involves “private investment in public equity.” Microcap public companies often engage in PIPE transactions to raise capital. According to the SEC’s complaint filed in federal district court in Brooklyn, N.Y., NIR’s family of AJW Funds provided cash financing to distressed, emerging growth, and start-up microcap companies quoted on the Over-the-Counter Bulletin Board or the Pink Sheets. The AJW Funds were typically invested in 120 to 130 different companies at any given time.
The SEC alleges that beginning in July 2004, Ribotsky began siphoning assets from one of the AJW Funds he was managing through NIR. Ribotsky typically wrote checks to himself or to “cash” and then instructed NIR office employees to cash the checks at a nearby bank. They would then give Ribotsky the money. Although Ribotsky was warned by NIR’s head accountant that he could not lawfully take this money for himself, Ribotsky continued to do so anyway for the next five years.
According to the SEC’s complaint, NIR’s strategy of investing in distressed and start-up companies began to show signs of failure by mid-to-late 2007. Many of the distressed companies to which the AJW Funds had made loans were by then essentially defunct or on the verge of filing for bankruptcy. The SEC alleges that Ribotsky made false and misleading statements to investors while his hedge funds were struggling to create the illusion of success. For instance, an NIR employee — who also is charged in the SEC’s complaint — prepared an investor chart accurately showing that NIR had invested a total of $31.4 million in 57 deals for the relevant period. When Ribotsky reviewed the chart, he told the employee that “investors can’t see this” and instructed him to “change the number to something near $60 million” before sending it to investors so they would falsely see an average investment of at least $1 million per deal. Ribotsky continued to make false and misleading statements to investors even after the AJW Funds’ outside auditor had calculated that it would take decades — if possible at all — to liquidate all of the AJW Funds’ PIPE investments under NIR’s stated investment and trading strategy.
The SEC further alleges that Ribotsky used money from one group of investors to pay another group of investors in 2007 without adequately disclosing this to any of the investors. Ribotsky’s misconduct also included his failure to conduct any meaningful due diligence before selling a third party $43.2 million of AJW Funds assets in November and December 2008 — a transaction that allowed Ribotsky to book a purported “realized” gain at a critical time without his funds actually receiving any money. NIR’s offering materials and investor communications touted that NIR engages in extensive due diligence reviews before making investment decisions on behalf of the AJW Funds. The third-party purchaser soon defaulted on his payment obligations and has never paid for any of the assets.
The SEC’s complaint charges Ribotsky and NIR with 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 Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint seeks a final judgment permanently enjoining Ribotsky and NIR from future violations of the above provisions of the federal securities laws and ordering them to disgorge any ill-gotten gains plus prejudgment interest and pay monetary penalties.”
“Washington, D.C., Sept. 28, 2011 — The Securities and Exchange Commission today charged a Long Island-based investment adviser with defrauding investors in hedge funds investing in PIPE transactions and misappropriating more than $1 million in client assets for his personal use.
The SEC alleges that Corey Ribotsky and his firm The NIR Group LLC repeatedly lied to investors to hide the truth that his PIPE investment and trading strategy was failing during the financial crisis. For example, Ribotsky falsely told investors that despite the adverse market conditions he could liquidate all of the PIPE investments in 36 to 48 months — a practical impossibility given the size of the investments. Meanwhile, Ribotsky misused investor money by writing checks to pay for personal services and such luxury items as a Lexus, Mercedes, and Rolex watch.
“In a classic betrayal of trust, Ribotsky stole from his investors and falsely assured them that his struggling hedge funds were thriving,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This enforcement action reflects our continuing commitment to bring to justice individuals and companies that committed fraud during the credit crisis.”
A “PIPE” transaction involves “private investment in public equity.” Microcap public companies often engage in PIPE transactions to raise capital. According to the SEC’s complaint filed in federal district court in Brooklyn, N.Y., NIR’s family of AJW Funds provided cash financing to distressed, emerging growth, and start-up microcap companies quoted on the Over-the-Counter Bulletin Board or the Pink Sheets. The AJW Funds were typically invested in 120 to 130 different companies at any given time.
The SEC alleges that beginning in July 2004, Ribotsky began siphoning assets from one of the AJW Funds he was managing through NIR. Ribotsky typically wrote checks to himself or to “cash” and then instructed NIR office employees to cash the checks at a nearby bank. They would then give Ribotsky the money. Although Ribotsky was warned by NIR’s head accountant that he could not lawfully take this money for himself, Ribotsky continued to do so anyway for the next five years.
According to the SEC’s complaint, NIR’s strategy of investing in distressed and start-up companies began to show signs of failure by mid-to-late 2007. Many of the distressed companies to which the AJW Funds had made loans were by then essentially defunct or on the verge of filing for bankruptcy. The SEC alleges that Ribotsky made false and misleading statements to investors while his hedge funds were struggling to create the illusion of success. For instance, an NIR employee — who also is charged in the SEC’s complaint — prepared an investor chart accurately showing that NIR had invested a total of $31.4 million in 57 deals for the relevant period. When Ribotsky reviewed the chart, he told the employee that “investors can’t see this” and instructed him to “change the number to something near $60 million” before sending it to investors so they would falsely see an average investment of at least $1 million per deal. Ribotsky continued to make false and misleading statements to investors even after the AJW Funds’ outside auditor had calculated that it would take decades — if possible at all — to liquidate all of the AJW Funds’ PIPE investments under NIR’s stated investment and trading strategy.
The SEC further alleges that Ribotsky used money from one group of investors to pay another group of investors in 2007 without adequately disclosing this to any of the investors. Ribotsky’s misconduct also included his failure to conduct any meaningful due diligence before selling a third party $43.2 million of AJW Funds assets in November and December 2008 — a transaction that allowed Ribotsky to book a purported “realized” gain at a critical time without his funds actually receiving any money. NIR’s offering materials and investor communications touted that NIR engages in extensive due diligence reviews before making investment decisions on behalf of the AJW Funds. The third-party purchaser soon defaulted on his payment obligations and has never paid for any of the assets.
The SEC’s complaint charges Ribotsky and NIR with 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 Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint seeks a final judgment permanently enjoining Ribotsky and NIR from future violations of the above provisions of the federal securities laws and ordering them to disgorge any ill-gotten gains plus prejudgment interest and pay monetary penalties.”
Thursday, October 6, 2011
PRESIDENT OF CONNECTION NEWSPAPER GETS 6 MONTHS IN PRISON FOR NOT PAYING EMPLOYMENT TAXES
The following excerpt is from the Department of Justice website:
Tuesday, September 27, 2011
“President of Virginia-Based Connection Newspapers Sentenced to Six Months in Prison for Failing to Pay Employment Taxes
Owed the Internal Revenue Service More Than $940,000 in Employment Taxes
WASHINGTON – Peter Labovitz of Alexandria, Va., was sentenced to six months in prison for failing to pay employment taxes to the Internal Revenue Service (IRS), the Justice Department and IRS announced today. Labovitz pleaded guilty on July 19, 2011, to willfully failing to pay over to the IRS the federal income taxes and Federal Insurance Contributions Act (FICA) taxes due and owing to the United States for Connections Newspapers LLC for the quarters ending Sept. 30, 2007, and Dec. 31, 2007.
According to the plea agreement and statement of facts, Labovitz was the president of Connection Newspapers, a Northern Virginia newspaper publisher that currently publishes approximately 15 community newspapers throughout Northern Virginia and Maryland. Between 2002 and 2008, Labovitz ran Connection Newspapers’ day-to-day operations, directed employees, approved payments and made financial decisions on behalf of the company. Labovitz admitted that between 2002 and 2008, he caused to be deducted and collected from the total taxable wages of his employees’ federal income taxes and FICA taxes. However, Labovitz failed to timely pay over to the IRS more than $940,000 in federal income taxes and FICA taxes withheld and due and owing to the United States, despite the fact that he was required to do so by law.
In addition to the term of imprisonment, Magistrate Judge John F. Anderson sentenced Labovitz to serve one year of supervised release, six months of which will be served on home confinement.”
Tuesday, September 27, 2011
“President of Virginia-Based Connection Newspapers Sentenced to Six Months in Prison for Failing to Pay Employment Taxes
Owed the Internal Revenue Service More Than $940,000 in Employment Taxes
WASHINGTON – Peter Labovitz of Alexandria, Va., was sentenced to six months in prison for failing to pay employment taxes to the Internal Revenue Service (IRS), the Justice Department and IRS announced today. Labovitz pleaded guilty on July 19, 2011, to willfully failing to pay over to the IRS the federal income taxes and Federal Insurance Contributions Act (FICA) taxes due and owing to the United States for Connections Newspapers LLC for the quarters ending Sept. 30, 2007, and Dec. 31, 2007.
According to the plea agreement and statement of facts, Labovitz was the president of Connection Newspapers, a Northern Virginia newspaper publisher that currently publishes approximately 15 community newspapers throughout Northern Virginia and Maryland. Between 2002 and 2008, Labovitz ran Connection Newspapers’ day-to-day operations, directed employees, approved payments and made financial decisions on behalf of the company. Labovitz admitted that between 2002 and 2008, he caused to be deducted and collected from the total taxable wages of his employees’ federal income taxes and FICA taxes. However, Labovitz failed to timely pay over to the IRS more than $940,000 in federal income taxes and FICA taxes withheld and due and owing to the United States, despite the fact that he was required to do so by law.
In addition to the term of imprisonment, Magistrate Judge John F. Anderson sentenced Labovitz to serve one year of supervised release, six months of which will be served on home confinement.”
Wednesday, October 5, 2011
COMPANY AGREES TO PAY $3 MILLION DOLLAR REFRIGERANT COMPRESSOR PRICE- FIXING CHARGE
The following is from the Department of Justice website:
“WASHINGTON — Danfoss Flensburg GmbH, formerly Danfoss Compressors GmbH, has agreed to plead guilty and to pay a $3 million criminal fine for its role in an international conspiracy to fix the prices of light commercial compressors, a type of refrigerant compressor used in devices such as water coolers and vending machines, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court in Detroit, Danfoss Flensburg GmbH, a German subsidiary of the Danfoss Group, a Danish corporation, participated in a conspiracy to fix the prices of light commercial compressors sold in the United States and elsewhere from as early as Oct. 14, 2004, and continuing until about Sept. 6, 2007. According to the plea agreement, which is subject to court approval, Danfoss agreed to cooperate with the department’s ongoing refrigerant compressor investigation.
Refrigerant compressors take in low-pressure refrigerant, compress it and then pump out a high-pressure vapor, which condenses and subsequently cools devices such as water coolers and vending machines.
“The department’s investigation into the international conspiracy to fix the prices of refrigerant compressors is ongoing,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “We are committed to ensuring open and fair competition in the refrigerant compressors market.”
According to the charge, Danfoss and co-conspirators carried out the conspiracy by agreeing during meetings and conversations to coordinate prices of light commercial compressors sold in the United States and elsewhere. As a part of the conspiracy, Danfoss and co-conspirators exchanged information on sales of light commercial compressors to monitor and enforce adherence to the agreed-upon prices.
Danfoss is charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million fine for corporations. The maximum fine 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.
Danfoss is the third company to be charged in the department’s investigation of the international conspiracy to fix the prices of refrigerant compressors. On Nov. 15, 2010, Panasonic Corporation pleaded guilty and was sentenced to pay a $49.1 million criminal fine and on Dec. 16, 2010, Embraco North America Inc. pleaded guilty and was sentenced to pay a $91.8 million criminal fine. In addition, on Sept. 27, 2011, three former executives – Ernesto Heinzelmann of Empresa Brasileira de Compressores S.A.; Gerson Verissimo of Tecumseh do Brasil Ltda.; and Naoki Adachi of Panasonic – were charged with participating in a conspiracy to coordinate price increases for refrigerant compressors to customers in the United States and elsewhere.”
“WASHINGTON — Danfoss Flensburg GmbH, formerly Danfoss Compressors GmbH, has agreed to plead guilty and to pay a $3 million criminal fine for its role in an international conspiracy to fix the prices of light commercial compressors, a type of refrigerant compressor used in devices such as water coolers and vending machines, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court in Detroit, Danfoss Flensburg GmbH, a German subsidiary of the Danfoss Group, a Danish corporation, participated in a conspiracy to fix the prices of light commercial compressors sold in the United States and elsewhere from as early as Oct. 14, 2004, and continuing until about Sept. 6, 2007. According to the plea agreement, which is subject to court approval, Danfoss agreed to cooperate with the department’s ongoing refrigerant compressor investigation.
Refrigerant compressors take in low-pressure refrigerant, compress it and then pump out a high-pressure vapor, which condenses and subsequently cools devices such as water coolers and vending machines.
“The department’s investigation into the international conspiracy to fix the prices of refrigerant compressors is ongoing,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “We are committed to ensuring open and fair competition in the refrigerant compressors market.”
According to the charge, Danfoss and co-conspirators carried out the conspiracy by agreeing during meetings and conversations to coordinate prices of light commercial compressors sold in the United States and elsewhere. As a part of the conspiracy, Danfoss and co-conspirators exchanged information on sales of light commercial compressors to monitor and enforce adherence to the agreed-upon prices.
Danfoss is charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million fine for corporations. The maximum fine 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.
Danfoss is the third company to be charged in the department’s investigation of the international conspiracy to fix the prices of refrigerant compressors. On Nov. 15, 2010, Panasonic Corporation pleaded guilty and was sentenced to pay a $49.1 million criminal fine and on Dec. 16, 2010, Embraco North America Inc. pleaded guilty and was sentenced to pay a $91.8 million criminal fine. In addition, on Sept. 27, 2011, three former executives – Ernesto Heinzelmann of Empresa Brasileira de Compressores S.A.; Gerson Verissimo of Tecumseh do Brasil Ltda.; and Naoki Adachi of Panasonic – were charged with participating in a conspiracy to coordinate price increases for refrigerant compressors to customers in the United States and elsewhere.”
RBC CAPITAL LLC HAS AGREED TO SETTLE SEC CHARGES WITH $30.4 MILLION
The following is an excerpt from the SEC website:
“Washington, D.C., Sept. 27, 2011 — The Securities and Exchange Commission today charged RBC Capital Markets LLC for misconduct in the sale of unsuitable investments to five Wisconsin school districts and its inadequate disclosures regarding the risks associated with those investments.
According to the SEC’s order instituting administrative proceedings, RBC Capital marketed and sold to trusts created by the school districts $200 million of credit-linked notes that were tied to the performance of synthetic collateralized debt obligations (CDOs). The school districts contributed $37.3 million of district funds to the investments with the remainder of the investment coming from funds borrowed by the trusts. The sales took place despite significant concerns within RBC Capital about the suitability of the product for municipalities like the school districts. Additionally, RBC Capital’s marketing materials failed to adequately explain the risks associated with the investments.
RBC Capital agreed to settle the SEC’s charges by paying a total of $30.4 million that will be distributed in varying amounts to the school districts through a Fair Fund.
Last month, the SEC separately charged St. Louis-based brokerage firm Stifel, Nicolaus & Co. and a former senior executive with fraudulent misconduct in connection with the same sale of the CDO investments to the school districts.
“RBC failed Securities 101 when it sold complex derivatives that were unsuitable to five school districts without fully informing them of the risks,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
Kenneth R. Lench, Chief of the SEC Division of Enforcement’s Structured and New Products Unit, added, “RBC Capital did not provide these school districts with full and accurate information regarding the risks of these complex structured products. We are pleased that today’s settlement will result in a significant recovery by the school districts.”
According to the SEC’s order, the five school districts are Kenosha Unified School District No. 1, Kimberly Area School District, School District of Waukesha, West Allis-West Milwaukee School District, and School District of Whitefish Bay. The board members and business managers for the school districts had no prior experience investing in CDOs or instruments tied to CDOs. Compared to the typical buyers of instruments tied to CDOs, the school districts were not sophisticated investors. The SEC’s order finds that the school districts lacked sufficient knowledge and sophistication to appreciate the nature of such investments.
RBC Capital consented to the entry of the SEC’s order without admitting or denying any of its findings. The order censured RBC Capital and directed that it cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, which among other things prohibit obtaining money by means of an untrue statement of material fact and engaging in any transaction, practice, or course of business that operates as a fraud or deceit upon the purchaser. RBC Capital agreed to pay disgorgement of $6.6 million, prejudgment interest of $1.8 million, and a penalty of $22 million.
The SEC’s investigation was conducted jointly by the Enforcement Division’s Municipal Securities and Public Pensions Unit led by Elaine Greenberg and Mark R. Zehner and Structured and New Products Unit led by Kenneth Lench and Reid Muoio. The investigative attorneys were Kevin Guerrero, Keshia W. Ellis and Ivonia K. Slade in Washington D.C. and Jeffrey A. Shank and Anne C. McKinley along with litigation counsel Steven C. Seeger and Robert M. Moye in the Chicago Regional Office. The broker-dealer examinations team of Marianne E. Neidhart, Scott M. Kalish, George J. Jacobus and Daniel R. Gregus of the Chicago Regional Office provided assistance with the investigation.
Other SEC enforcement actions related to the offer and sale of CDOs include Goldman Sachs, ICP Asset Management, J.P. Morgan, and Wachovia Capital Markets.”
“Washington, D.C., Sept. 27, 2011 — The Securities and Exchange Commission today charged RBC Capital Markets LLC for misconduct in the sale of unsuitable investments to five Wisconsin school districts and its inadequate disclosures regarding the risks associated with those investments.
According to the SEC’s order instituting administrative proceedings, RBC Capital marketed and sold to trusts created by the school districts $200 million of credit-linked notes that were tied to the performance of synthetic collateralized debt obligations (CDOs). The school districts contributed $37.3 million of district funds to the investments with the remainder of the investment coming from funds borrowed by the trusts. The sales took place despite significant concerns within RBC Capital about the suitability of the product for municipalities like the school districts. Additionally, RBC Capital’s marketing materials failed to adequately explain the risks associated with the investments.
RBC Capital agreed to settle the SEC’s charges by paying a total of $30.4 million that will be distributed in varying amounts to the school districts through a Fair Fund.
Last month, the SEC separately charged St. Louis-based brokerage firm Stifel, Nicolaus & Co. and a former senior executive with fraudulent misconduct in connection with the same sale of the CDO investments to the school districts.
“RBC failed Securities 101 when it sold complex derivatives that were unsuitable to five school districts without fully informing them of the risks,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
Kenneth R. Lench, Chief of the SEC Division of Enforcement’s Structured and New Products Unit, added, “RBC Capital did not provide these school districts with full and accurate information regarding the risks of these complex structured products. We are pleased that today’s settlement will result in a significant recovery by the school districts.”
According to the SEC’s order, the five school districts are Kenosha Unified School District No. 1, Kimberly Area School District, School District of Waukesha, West Allis-West Milwaukee School District, and School District of Whitefish Bay. The board members and business managers for the school districts had no prior experience investing in CDOs or instruments tied to CDOs. Compared to the typical buyers of instruments tied to CDOs, the school districts were not sophisticated investors. The SEC’s order finds that the school districts lacked sufficient knowledge and sophistication to appreciate the nature of such investments.
RBC Capital consented to the entry of the SEC’s order without admitting or denying any of its findings. The order censured RBC Capital and directed that it cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, which among other things prohibit obtaining money by means of an untrue statement of material fact and engaging in any transaction, practice, or course of business that operates as a fraud or deceit upon the purchaser. RBC Capital agreed to pay disgorgement of $6.6 million, prejudgment interest of $1.8 million, and a penalty of $22 million.
The SEC’s investigation was conducted jointly by the Enforcement Division’s Municipal Securities and Public Pensions Unit led by Elaine Greenberg and Mark R. Zehner and Structured and New Products Unit led by Kenneth Lench and Reid Muoio. The investigative attorneys were Kevin Guerrero, Keshia W. Ellis and Ivonia K. Slade in Washington D.C. and Jeffrey A. Shank and Anne C. McKinley along with litigation counsel Steven C. Seeger and Robert M. Moye in the Chicago Regional Office. The broker-dealer examinations team of Marianne E. Neidhart, Scott M. Kalish, George J. Jacobus and Daniel R. Gregus of the Chicago Regional Office provided assistance with the investigation.
Other SEC enforcement actions related to the offer and sale of CDOs include Goldman Sachs, ICP Asset Management, J.P. Morgan, and Wachovia Capital Markets.”
Tuesday, October 4, 2011
ADMINISTRATOR JACKSON SPEAKS ON TRADE AGREEMENTS
October 4, 2011
The following is from an EPA e-mail:
WASHINGTON - EPA Administrator Lisa P. Jackson issued the following statement on the trade agreements submitted to Congress yesterday by the President:
"These agreements serve President Obama's top priority of creating jobs across the US and contain an equal commitment to enforcing environmental standards. The health and environmental commitments will continue to foster opportunities for America's leading environmental technology industry, which exports innovative pollution control technology to countries around the world. These trade agreements will make it easier for American inventors and innovative manufacturers to sell their 'Made in the USA' products in the global marketplace while holding all parties to the same level of accountability for meeting environmental commitments as for the other commitments.”
FORMER EXECUTIVES INDICTED IN COMPRESSOR PRICE-FIXING CASE
The following excerpt is from the Department of Justice website:
Tuesday, September 27, 2011
“Former Executives from Panasonic Corp., Whirlpool Corp. Subsidiary and Tecumseh Products Co. Subsidiary Indicted in Compressor Price-Fixing Conspiracy
First Executives Charged in Ongoing Investigation into the Worldwide Refrigerant Compressors Market
WASHINGTON — A Detroit federal grand jury returned an indictment today against three former executives from Panasonic Corporation, a Whirlpool Corporation subsidiary and a Tecumseh Products Company subsidiary for their role in an international conspiracy to fix the prices of refrigerant compressors, which are used in refrigerators and freezers in homes and businesses, the Department of Justice announced.
The indictment, returned today in U.S. District Court in Detroit, charges Ernesto Heinzelmann, former president and chief executive officer of Empresa Brasileira de Compressores S.A. (Embraco), a division of Whirlpool S.A.; Gerson VerÃssimo, former president of Tecumseh do Brasil Ltda., a subsidiary of Tecumseh Products Company; and Naoki Adachi, general manager of global sales & SE group, refrigeration devices division at Panasonic Corporation, with conspiring to suppress and eliminate competition by coordinating price increases for refrigerant compressors to customers in the United States and elsewhere. Heinzelmann and VerÃssimo are charged with participating in the conspiracy from at least as early as Oct.14, 2004, until on or about Dec. 31, 2007. Adachi is charged with participating in the conspiracy from at least as early as May 10, 2006, until on or about Dec. 31, 2007. Heinzelmann, VerÃssimo and Adachi are the first executives charged in the ongoing investigation into the worldwide refrigerant compressors market.
Refrigerant compressors take in low-pressure refrigerant, compress it and then pump out a high-pressure vapor, which condenses and subsequently cools devices such as refrigerators and freezers.
“Cracking down on international price fixing cartels has been and will continue to be among the most significant priorities for the Antitrust Division,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Our investigation into the refrigerant compressors industry has already resulted in two companies – Panasonic and Embraco North America – pleading guilty and paying a total of $140.9 million in criminal fines. Our investigation is continuing.”
According to the indictment, Heinzelmann, VerÃssimo and Adachi carried out the conspiracy by participating in or directing the participation of subordinate employees in meetings and conversations to coordinate price increases of refrigerant compressors in the United States and elsewhere. As part of the conspiracy, Heinzelmann, VerÃssimo, Adachi and co-conspirators sold and accepted payments for the compressors at collusive and non-competitive prices.
Heinzelmann, VerÃssimo and Adachi 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. The maximum fine 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.
On Nov. 15, 2010, Panasonic Corporation pleaded guilty and was sentenced to pay a $49.1 million criminal fine, and on Dec.16, 2010, Embraco North America Inc. pleaded guilty and was sentenced to pay a $91.8 million criminal fine.”
Tuesday, September 27, 2011
“Former Executives from Panasonic Corp., Whirlpool Corp. Subsidiary and Tecumseh Products Co. Subsidiary Indicted in Compressor Price-Fixing Conspiracy
First Executives Charged in Ongoing Investigation into the Worldwide Refrigerant Compressors Market
WASHINGTON — A Detroit federal grand jury returned an indictment today against three former executives from Panasonic Corporation, a Whirlpool Corporation subsidiary and a Tecumseh Products Company subsidiary for their role in an international conspiracy to fix the prices of refrigerant compressors, which are used in refrigerators and freezers in homes and businesses, the Department of Justice announced.
The indictment, returned today in U.S. District Court in Detroit, charges Ernesto Heinzelmann, former president and chief executive officer of Empresa Brasileira de Compressores S.A. (Embraco), a division of Whirlpool S.A.; Gerson VerÃssimo, former president of Tecumseh do Brasil Ltda., a subsidiary of Tecumseh Products Company; and Naoki Adachi, general manager of global sales & SE group, refrigeration devices division at Panasonic Corporation, with conspiring to suppress and eliminate competition by coordinating price increases for refrigerant compressors to customers in the United States and elsewhere. Heinzelmann and VerÃssimo are charged with participating in the conspiracy from at least as early as Oct.14, 2004, until on or about Dec. 31, 2007. Adachi is charged with participating in the conspiracy from at least as early as May 10, 2006, until on or about Dec. 31, 2007. Heinzelmann, VerÃssimo and Adachi are the first executives charged in the ongoing investigation into the worldwide refrigerant compressors market.
Refrigerant compressors take in low-pressure refrigerant, compress it and then pump out a high-pressure vapor, which condenses and subsequently cools devices such as refrigerators and freezers.
“Cracking down on international price fixing cartels has been and will continue to be among the most significant priorities for the Antitrust Division,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Our investigation into the refrigerant compressors industry has already resulted in two companies – Panasonic and Embraco North America – pleading guilty and paying a total of $140.9 million in criminal fines. Our investigation is continuing.”
According to the indictment, Heinzelmann, VerÃssimo and Adachi carried out the conspiracy by participating in or directing the participation of subordinate employees in meetings and conversations to coordinate price increases of refrigerant compressors in the United States and elsewhere. As part of the conspiracy, Heinzelmann, VerÃssimo, Adachi and co-conspirators sold and accepted payments for the compressors at collusive and non-competitive prices.
Heinzelmann, VerÃssimo and Adachi 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. The maximum fine 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.
On Nov. 15, 2010, Panasonic Corporation pleaded guilty and was sentenced to pay a $49.1 million criminal fine, and on Dec.16, 2010, Embraco North America Inc. pleaded guilty and was sentenced to pay a $91.8 million criminal fine.”
Monday, October 3, 2011
NINJA VIDEO.NET WILL NO LONGER GIVE AWAY THE STORE
The following is an excerpt from the Department of Justice website:
“Thursday, September 29, 2011
NinjaVideo Founder Pleads Guilty in Virginia to Criminal Copyright Conspiracy
WASHINGTON – Hana A. Beshara, 29, of Las Vegas, pleaded guilty today for her role in founding NinjaVideo.net, a website that provided millions of users with the ability to illegally download infringing copies of copyright-protected movies and television programs in high-quality formats.
The guilty plea was announced by U.S. Attorney Neil H. MacBride for the Eastern District of Virginia , Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
Beshara pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia to conspiracy and criminal copyright infringement. At sentencing, scheduled for Jan. 6, 2012, Beshara faces a maximum penalty of five years in prison on each count.
According to court documents, Beshara was one of the founders of NinjaVideo.net, which operated from February 2008 until it was shut down by law enforcement in June 2010. The NinjaVideo.net website allowed visitors to download infringing copies of hundreds of television shows and movies, including those still playing in theaters and some that had not yet been released in theaters. Website visitors could download much of the infringing content for free, but visitors who “donated” at least $25 obtained access to private forum boards that contained a wider range of infringing material.
According to court documents, NinjaVideo.net generated additional income from Internet advertising. Beshara admitted that she negotiated agreements with online advertising entities and received income from them. Beshara admitted that she and her co-conspirators collected more than $500,000 in overall proceeds during the website’s two-and-a-half years of operation, with Beshara personally receiving more than $200,000. As part of her plea agreement, Beshara agreed to forfeit assets seized by ICE’s Homeland Security Investigations (HSI) in June 2010, including cash, an investment brokerage account, two bank accounts, a Paypal account and one Internet advertising account.
Beshara, who referred to herself as “Queen Phara” and “the face and the name behind Ninja,” was the day-to-day administrator of NinjaVideo.net, according to court documents. In that role, Beshara supervised the website and at times directed the release of infringing copies of specific movies and television shows, including through uploads of copyrighted works by members of the group to computer servers around the world and in the Eastern District of Virginia.
According to the statement of facts, Beshara frequently released podcasts to communicate with the millions of visitors to NinjaVideo.net. In one such podcast, which Beshara entitled “The NinjaVideo Manifesto,” Beshara boasted about NinjaVideo’s “zero hour releases on TV and movies” – meaning that the website made infringing content available as soon as the legitimate product was released.
On Sept. 9, 2011, Beshara and four other alleged co-conspirators were indicted on six charges related to their work with NinjaVideo.net. Co-defendant Matthew David Howard Smith pleaded guilty on Sept. 23, 2011, to conspiracy and criminal copyright infringement, and will be sentenced on Dec. 16, 2011. The remaining three defendants are scheduled for a jury trial on Feb. 6, 2012.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly for the Eastern District of Virginia and Trial Attorney Glenn Alexander of the Criminal Division’s Computer Crime & Intellectual Property Section.
The investigation was conducted by the National Intellectual Property Rights Coordination Center (IPR Center). The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. This criminal investigation is a part of the IPR Center’s groundbreaking In Our Sites Operation, which targets the online sale of counterfeit and pirated commodities. As a task force, the IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.
To report IP theft or to learn more about the IPR Center, visit
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. “www.IPRCenter.gov .
“Thursday, September 29, 2011
NinjaVideo Founder Pleads Guilty in Virginia to Criminal Copyright Conspiracy
WASHINGTON – Hana A. Beshara, 29, of Las Vegas, pleaded guilty today for her role in founding NinjaVideo.net, a website that provided millions of users with the ability to illegally download infringing copies of copyright-protected movies and television programs in high-quality formats.
The guilty plea was announced by U.S. Attorney Neil H. MacBride for the Eastern District of Virginia , Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
Beshara pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia to conspiracy and criminal copyright infringement. At sentencing, scheduled for Jan. 6, 2012, Beshara faces a maximum penalty of five years in prison on each count.
According to court documents, Beshara was one of the founders of NinjaVideo.net, which operated from February 2008 until it was shut down by law enforcement in June 2010. The NinjaVideo.net website allowed visitors to download infringing copies of hundreds of television shows and movies, including those still playing in theaters and some that had not yet been released in theaters. Website visitors could download much of the infringing content for free, but visitors who “donated” at least $25 obtained access to private forum boards that contained a wider range of infringing material.
According to court documents, NinjaVideo.net generated additional income from Internet advertising. Beshara admitted that she negotiated agreements with online advertising entities and received income from them. Beshara admitted that she and her co-conspirators collected more than $500,000 in overall proceeds during the website’s two-and-a-half years of operation, with Beshara personally receiving more than $200,000. As part of her plea agreement, Beshara agreed to forfeit assets seized by ICE’s Homeland Security Investigations (HSI) in June 2010, including cash, an investment brokerage account, two bank accounts, a Paypal account and one Internet advertising account.
Beshara, who referred to herself as “Queen Phara” and “the face and the name behind Ninja,” was the day-to-day administrator of NinjaVideo.net, according to court documents. In that role, Beshara supervised the website and at times directed the release of infringing copies of specific movies and television shows, including through uploads of copyrighted works by members of the group to computer servers around the world and in the Eastern District of Virginia.
According to the statement of facts, Beshara frequently released podcasts to communicate with the millions of visitors to NinjaVideo.net. In one such podcast, which Beshara entitled “The NinjaVideo Manifesto,” Beshara boasted about NinjaVideo’s “zero hour releases on TV and movies” – meaning that the website made infringing content available as soon as the legitimate product was released.
On Sept. 9, 2011, Beshara and four other alleged co-conspirators were indicted on six charges related to their work with NinjaVideo.net. Co-defendant Matthew David Howard Smith pleaded guilty on Sept. 23, 2011, to conspiracy and criminal copyright infringement, and will be sentenced on Dec. 16, 2011. The remaining three defendants are scheduled for a jury trial on Feb. 6, 2012.
The case is being prosecuted by Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly for the Eastern District of Virginia and Trial Attorney Glenn Alexander of the Criminal Division’s Computer Crime & Intellectual Property Section.
The investigation was conducted by the National Intellectual Property Rights Coordination Center (IPR Center). The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. This criminal investigation is a part of the IPR Center’s groundbreaking In Our Sites Operation, which targets the online sale of counterfeit and pirated commodities. As a task force, the IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.
To report IP theft or to learn more about the IPR Center, visit
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. “www.IPRCenter.gov .
Sunday, October 2, 2011
MORGAN STANLEY SETTLES ANTITRUST VIOLATIONS MILLION IN
The following is an excerpt from the Department of Justice blogsite:
“Derivative Contract Led to Higher Prices for Electricity Generating Capacity in New York City”
“WASHINGTON — The Department of Justice today announced a settlement with Morgan Stanley that requires Morgan to pay $4.8 million for violating the antitrust laws by entering into an agreement with KeySpan Corporation that restrained competition in the New York City electricity capacity market. The department said the agreement likely resulted in a price increase for electricity retailers, which, in turn, led to increased electricity prices for consumers. The department’s Antitrust Division today filed a civil antitrust complaint in U.S. District Court for the Southern District of New York and submitted a proposed settlement that, if approved by the court, would resolve the lawsuit. The settlement provides for disgorgement of profits for a violation of the antitrust laws and requires Morgan to pay $4.8 million to the United States. The department previously entered into a settlement with KeySpan that required the company to disgorge $12 million in profits for its role in the agreement, which was approved by the court in February 2011.
“This settlement with a major financial institution will signal to the financial services community that use of derivatives for anticompetitive ends will not be tolerated,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Disgorgement of ill-gotten gains, as was paid here, is an effective Antitrust Division tool to remedy harm to competition.”
According to the complaint, in January 2006, KeySpan and Morgan executed a financial derivative for New York City capacity while Morgan simultaneously entered into an off-setting derivative with Astoria Generating Company, KeySpan’s largest competitor in the capacity market. The agreements effectively transferred to KeySpan a financial interest in Astoria’s capacity, thereby ensuring that KeySpan would withhold substantial output from the capacity market and increase prices. For its part, Morgan earned revenues by retaining the spread between the fixed prices of the two derivative agreements. The anticompetitive effects of the Morgan/KeySpan agreement lasted until March 2008, when regulatory conditions eliminated KeySpan’s ability to affect the market price of electricity capacity.
New York City’s electricity generating capacity market was created to ensure that sufficient generation capacity exists to meet expected electricity needs. Electricity retailers serving consumers in the city are required to purchase capacity from generators in amounts related to their expected peak energy demand. Electricity generators offer to sell their capacity to electricity retailers in regularly held auctions.
Morgan Stanley is a Delaware corporation with its principal place of business in New York City. Morgan provides diversified financial services, operating a global asset management business, investment banking services and a global securities business, including a commodities trading division.
The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to William Stallings, Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 5th St. N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.”
FISH AFFECTED BY TOXINS FROM DEEPWATER HORIZON OIL SPILL
The following is an excerpt from the National Science Foundation website:
September 26, 2011
“Despite low concentrations of oil constituents in Gulf of Mexico waters from the Deepwater Horizon spill, fish were dramatically affected by toxic components of the oil.
So found a team led by scientists Fernando Galvez and Andrew Whitehead of Louisiana State University (LSU).
The researchers published their results this week in the journal Proceedings of the National Academy of Sciences (PNAS).
Galvez, Whitehead and colleagues undertook a combined field and laboratory study. It showed widespread effects of the Deepwater Horizon oil spill on fish in Louisiana marshes.
Gene expression in tissues of the fish studied--in this case killifish--was predictive of oil spill responses such as developmental abnormalities and death, say the biologists.
"It also indicated impairment of fish reproduction," says Whitehead.
The study was funded by a National Science Foundation (NSF) rapid response grant.
"Joining remote-sensing of the spill with gene expression data from wild-caught killifish, these scientists have captured the effects of low-level exposure to pollutants on the long-term health of fish," says George Gilchrist, acting deputy director of NSF's Division of Environmental Biology, which funded the research.
"It's a landmark study in applying genomic technology to wild animal populations under stress."
Fish gill tissues, important for maintaining critical fish body functions, appeared damaged and had altered protein expression.
These effects persisted long after visible oil disappeared from a marsh's surface.
Developing fish embryos exposed to field-collected waters had similar cellular responses, Whitehead says.
"This is of concern because early life-stages of many organisms are particularly sensitive to the toxic effects of oil," says Whitehead, "and because marsh contamination occurred during the spawning season of many species."
A major message of the previous Exxon Valdez oil spill in Alaska, he says, "is that sub-lethal biological effects, especially those linked with reproduction, are most predictive of the long-term effects of oil in many fish species, such as herring and salmon."
The Gulf of Mexico study shows similar early signals of sub-lethal effects after the Deepwater Horizon oil spill.
The scientists are following up with research examining more direct effects of oil exposure on fish reproduction, development and growth.
Other co-authors of the paper are Benjamin Dubansky, Charlotte Bodinier, Scott Miles, Chet Pilley, Vandana Raghunathan, Jennifer Roach, and Nan Walker of LSU; Tzintzuri Garcia and Ronald Walter of Texas State University and Charles Rice of Clemson University.
The research was also funded by the Gulf of Mexico Research Initiative.”
September 26, 2011
“Despite low concentrations of oil constituents in Gulf of Mexico waters from the Deepwater Horizon spill, fish were dramatically affected by toxic components of the oil.
So found a team led by scientists Fernando Galvez and Andrew Whitehead of Louisiana State University (LSU).
The researchers published their results this week in the journal Proceedings of the National Academy of Sciences (PNAS).
Galvez, Whitehead and colleagues undertook a combined field and laboratory study. It showed widespread effects of the Deepwater Horizon oil spill on fish in Louisiana marshes.
Gene expression in tissues of the fish studied--in this case killifish--was predictive of oil spill responses such as developmental abnormalities and death, say the biologists.
"It also indicated impairment of fish reproduction," says Whitehead.
The study was funded by a National Science Foundation (NSF) rapid response grant.
"Joining remote-sensing of the spill with gene expression data from wild-caught killifish, these scientists have captured the effects of low-level exposure to pollutants on the long-term health of fish," says George Gilchrist, acting deputy director of NSF's Division of Environmental Biology, which funded the research.
"It's a landmark study in applying genomic technology to wild animal populations under stress."
Fish gill tissues, important for maintaining critical fish body functions, appeared damaged and had altered protein expression.
These effects persisted long after visible oil disappeared from a marsh's surface.
Developing fish embryos exposed to field-collected waters had similar cellular responses, Whitehead says.
"This is of concern because early life-stages of many organisms are particularly sensitive to the toxic effects of oil," says Whitehead, "and because marsh contamination occurred during the spawning season of many species."
A major message of the previous Exxon Valdez oil spill in Alaska, he says, "is that sub-lethal biological effects, especially those linked with reproduction, are most predictive of the long-term effects of oil in many fish species, such as herring and salmon."
The Gulf of Mexico study shows similar early signals of sub-lethal effects after the Deepwater Horizon oil spill.
The scientists are following up with research examining more direct effects of oil exposure on fish reproduction, development and growth.
Other co-authors of the paper are Benjamin Dubansky, Charlotte Bodinier, Scott Miles, Chet Pilley, Vandana Raghunathan, Jennifer Roach, and Nan Walker of LSU; Tzintzuri Garcia and Ronald Walter of Texas State University and Charles Rice of Clemson University.
The research was also funded by the Gulf of Mexico Research Initiative.”
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