FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today announced fraud charges and an asset freeze against the operators of a South Florida-based Ponzi scheme targeting investors through YouTube videos and selling them investments in a product called virtual concierge machines (VCMs) that would purportedly generate guaranteed returns of 300 to 500 percent in four years.
In a parallel action, the U.S. Attorney’s Office for the Southern District of Florida today announced criminal charges.
The SEC alleges that Joseph Signore of West Palm Beach, Paul L. Schumack II of Pompano Beach, and their respective companies JCS Enterprises Inc. and T.B.T.I. Inc. falsely promised hundreds of investors nationwide that their funds would be used to purchase ATM-like machines that businesses could use to advertise products and services via touch screen and printable tickets or coupons. Investors supposedly needed to do nothing to earn returns on their investment in a VCM, which would purportedly be placed at such locations as hotels, airports, and stadiums where they would derive revenue from the businesses paying to advertise through them. However, instead of advertising revenue serving as the driving force behind the returns paid to investors, the two men and their companies paid returns to earlier investors using money from newer investors. Signore and Schumack also diverted millions of dollars in investor funds for their personal use and other unrelated expenses.
“Signore and Schumack touted VCMs as a revolutionary enterprise and fail-safe investment based on a stream of advertising revenue that would generate the guaranteed returns paid to investors,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office. “However, the advertising revenue was virtually non-existent and investors aren’t enjoying the riches touted on YouTube.”
According to the SEC’s complaint unsealed today in U.S. District Court for the Southern District of Florida, Signore, Schumack, JCS, and T.B.T.I. fraudulently raised more than $40 million since at least 2011 by guaranteeing exorbitant returns. The SEC alleges that JCS Enterprises promoted VCMs through YouTube videos, e-mail solicitations, and investor seminars. In one YouTube video, an apparent investor is polishing his new Cadillac as a friend proclaims, “What an amazing car! How can you afford this?” The investor responds, “My Virtual Concierge.” A similar scene ensues with a different investor showing a friend her new pool. A spokesperson appears and asks the viewer, “Do you want to make more money? Then it is time for you to own a Virtual Concierge.”
The SEC alleges that Signore, Schumack, and their companies promised to locate, place, and manage the VCMs while informing investors where their VCMs were located. Investors were to be provided a password to allow them online access to monitor the activity of their VCMs. However, VCMs were not placed anywhere near the rate of those purchased by investors, who were never provided the locations of their VCM and could not track activity as promised. The scheme collapsed in typical Ponzi fashion once new investor funds dried up. The majority of investors stopped receiving their monthly payments in January 2014, yet Signore and Schumack continued to solicit new investors while fabricating excuses to placate irate investors no longer receiving their returns. JCS went so far as to issue a press release claiming that TBTI had defrauded JCS and it was “investigating the matter.”
Glenn S. Gordon, associate director of the SEC’s Miami Regional Office, said, “The defendants never told investors the most important way in which these machines resembled ATMs – as a source of ready cash from investors that the defendants used for their own benefit.”
The SEC also alleges that Signore and Schumack misappropriated investor funds for themselves while never telling investors they would do so. Signore used investor funds from accounts at JCS to divert approximately $2 million directly to himself and family members. Signore also routed investor money to unrelated business ventures he operates with his wife. Debit charges from JCS accounts indicate that approximately $56,000 in investor funds were spent at restaurants, merchandising stores, and a tanning salon as well as other credit card bills. Money from T.B.T.I’s accounts was similarly used for personal expenses. For example, Schumack’s wife signed a check for $500,000 made out to the IRS. T.B.T.I. also has transferred approximately $4 million from its investor account to an unrelated account from which Schumack and others executed more than 100 cash withdrawals totaling around $4.8 million, which was 91 percent of the account balance. Another $23,000 of investor money was used by Schumack for personal expenses including restaurants, merchandising stores, and a nutrient therapy center.
The SEC’s complaint charges JCS Enterprises, T.B.T.I., Signore, and Schumack with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 along with Rule 10b-5. The SEC seeks disgorgement of ill-gotten gains, prejudgment interest, and financial penalties among other relief for investors. The Honorable Donald Middlebrooks granted the SEC’s request for a temporary restraining order and a temporary asset freeze against JCS, T.B.T.I., Signore and Schumack, and further required the defendants to provide accountings. Judge Middlebrooks also entered an order appointing James D. Sallah, Esq. as receiver for JCS and T.B.T.I. A court hearing has been scheduled for April 17.
The SEC’s investigation, which is continuing, has been conducted by Fernando Torres, Linda S. Schmidt, Vincent T. Hull, and Mark Dee in the Miami Regional Office. The case has been supervised by Jason R. Berkowitz. The SEC’s litigation is being led by Russell Koonin and Mr. Hull. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of Florida as well as the Federal Bureau of Investigation, Florida Office of Financial Regulation, and Texas State Securities Board.
Wednesday, April 9, 2014
DEFENSE SECRETARY HAGEL STRESSES U.S.-CHINA MILITARY-TO-MILITARY RELATIONS
FROM: U.S. DEFENSE DEPARTMENT
Hagel, China’s Defense Minister Build Military Relations Model
By Cheryl Pellerin
American Forces Press Service
BEIJING, April 8, 2014 – At the invitation of Chinese Defense Minister Gen. Chang Wanquan, Defense Secretary Chuck Hagel visited the Chinese Defense Ministry’s headquarters here today.
Hagel met with Chang and then a larger group of defense officials before he and Chang revealed during a news conference a new model for U.S.-China military-to-military relations.
The secretary’s visit to Beijing comes in the middle of a 10-day trip to the Asia-Pacific region, during which he visited Japan and will travel to Mongolia later this week. The trip began in Hawaii with the first meeting for defense ministers of the 10 member countries of the Association for Southeast Asian Nations to be held in the United States.
“One focus of our discussion today was how we develop a new model of military-to-military relations,” Hagel said about his meeting with Chang. “We’ve just finished a very good meeting,” the secretary added, “during which I restated that the United States is committed to continuing to build a constructive and productive relationship with China.”
Hagel explained that the United States believes its approach should be to build a sustained and substantive dialogue, deepen practical cooperation in areas of common interest, and manage competition and differences through openness and communication.
In each area, he added, there is much work to do, but the nations are making strong progress.
“As General Chang announced, we agreed today on several new ways to improve our military-to-military relationship,” Hagel said. First, the U.S. and Chinese defense agencies will establish an army-to-army dialogue as an institutionalized mechanism within the framework of the U.S.-China military-to-military relationship.
Second, the secretary added, “we agreed to participate in a joint military-medical cooperative activity. This will build on experiences gained at the 2014 Rim of the Pacific exercise, a U.S.-hosted multilateral naval exercise that China will participate in for the first time this summer.”
Third, Hagel said, the defense agencies will establish an Asia-Pacific security dialogue between the assistant secretary of defense for Asia-Pacific security affairs and the director of the Chinese Defense Ministry’s foreign affairs office to exchange views on a range of security issues.
“This dialogue will build on the discussions Gen. Chong and I had today on regional security issues,” the secretary said, “including North Korea and the growing threat posed by its nuclear and missile programs.”
Hagel added that continued instability in Northeast Asia is not in China’s interest, and that the United States is deeply concerned about the threat North Korea poses to U.S. treaty allies and, increasingly, to the homeland.
“The United States and China have a shared interest in achieving a verifiable denuclearization of the Korean Peninsula,” he said.
Hagel and Chang also discussed tensions in the East and South China seas.
“I underscored that all parties should refrain from provocative actions and the use of intimidation, coercion or aggression to advance their claims,” the secretary said. “Such disputes must be resolved peacefully and in accordance with international law.”
Hagel noted that yesterday he toured China’s aircraft carrier, met personnel aboard the ship and had an opportunity to listen. He will later speak to officers at the National Defense University and is looking forward to visiting with noncommissioned officers, whom he characterized as the backbone of all militaries.
“Exchanges like this at every level of command are critical for building mutual understanding and also respect, Hagel said. “Our vision is a future where our militaries can work closely together on a range of challenges, such as humanitarian assistance and disaster relief missions.”
To reach this objective, the secretary said, “we must be candid about issues we disagree about, [but also continue] to deepen our cooperation in areas where we do agree. We have many common interests, and we agree on many things.”
Regarding cybersecurity, Hagel emphasized the need for the United States and China to be more open about each other’s capabilities and intentions in this critically important domain.
“Greater openness about cyber reduces the risk that misunderstanding and misperception could lead to miscalculation,” he said. “More transparency will strengthen China-U.S. relations.”
The U.S.-China relationship is important for stability and security in the Asia-Pacific, and for achieving prosperity for both nations in the 21st century, the secretary added.
“As President [Barack] Obama has said,” Hagel noted, “the United States welcomes the rise of a stable, peaceful and prosperous China.”
Tuesday, April 8, 2014
U.S. DEFENSE DEPARTMENT CONTRACTS FOR APRIL 8, 2014
FROM: U.S. DEFENSE DEPARTMENT DEFENSE DEPARTMENT
CONTRACTS
DEFENSE LOGISTICS AGENCY
Rosenbauer America,* Lyons, S.D., has been awarded a maximum $382,500,000 fixed-price with economic-price-adjustment contract for the procurement of commercial type fire and emergency vehicles. This contract is a competitive acquisition, and 24 offers were received. This contract is one of up to 20 contracts being issued against solicitation number SPM8EC-11-R-0005. This contract is for a term of five years and is for a portion of the estimated $382,500,000, and will be competed amongst other contractors who receive a contract under this solicitation. Request for quotations will be issued to all twenty and the resulting contract delivery order(s) will be awarded to the offerer with the lowest price that is technically acceptable. Locations of performance are South Dakota and Minnesota with an April 7, 2019 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 through fiscal 2019 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE8EC-14-D-0015).
Atlantic Diving Supply Inc.,* Virginia Beach, Va., has been awarded a maximum $66,783,068 modification (P00003) exercising the first option period on a one-year base contract (SPM2D0-13-D-0003) with nine one-year option periods for various medical/surgical products. This is a fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract. Location of performance is Virginia with an April 8, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 warstopper funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Henry Schein Inc., Melville, N.Y., has been awarded a maximum $26,602,450 modification (P00012) exercising the fourth option period on a one-year base contract (SPM2DE-10-D-7342) with four one-year option periods for various laboratory supplies. This is a fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract. Location of performance is New York with an April 25, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Labatt Food Service, San Antonio, Texas, has been awarded a maximum $17,250,000 modification (P00204) exercising the first option period on a one-year base contract (SPM300-13-D-3655) with one one-year option period for full line food distribution. This is a fixed-price with economic-price-adjustment, indefinite-quantity contract. Location of performance is Texas with an April 12, 2015 performance completion date. Using military services are Army and Air Force. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Stern Produce Co.,* Phoenix, Ariz., has been awarded a maximum $16,625,000 fixed-price with economic-price-adjustment contract for fresh fruit and vegetables support. This is a competitive acquisition, and one offer was received. This is an 18-month base contract with two 18-month option periods. Location of performance is Arizona with an Oct. 12, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, federal civilian agencies, and Department of Agriculture schools and reservations. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE300-14-D-P255).
RPR Industries,* Grantsville, W.Va., has been awarded a maximum $11,601,492 firm-fixed-price contract for life preservers and component parts. This is a competitive acquisition, and two offers were received. This is a two-year base contract with three one-year option periods. Location of performance is West Virginia with a July 12, 2016 performance completion date. Using military service is Air Force. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE8EH-14-D-0007).
Exelan Pharmaceuticals Inc., Lawrenceville, Ga., has been awarded a maximum $8,509,384 firm-fixed-price contract for pharmaceutical products. This is a competitive acquisition, and four offers were received. This is a one-year base contract with four one-year option periods. Locations of performance are Georgia and New York with an April 7, 2015 performance completion date. Using services are federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPM2D0-14-D-N005).
ARMY
Savi Technology Inc.,* Alexandria, Va., was awarded a $102,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for Active Radio Frequency iIdentification hardware, software, documentation, and incidental services to authorized government users worldwide. Incidental services include training, warranty, and technical engineering services. Funding and work performance locations will be determined with each order. Estimated completion date is April 6, 2017. Bids were solicited via the Internet with one received. Army Contracting Command, Rock Island Arsenal, Ill., is the contracting activity (W52P1J-14-D-0014).
NAVY
Patricia I. Romero Inc., doing business as Pacific West Builders*, National City, Calif. (N62473-14-D-0038); Peter Vander Werff Construction Inc.,* El Cajon, Calif. (N62473-14-D-0039); Dimensions Construction Inc.*, San Diego, Calif. (N62473-14-D-0040); I.E.-Pacific Inc.,* San Diego, Calif. (N62473-14-D-0041); and Halbert Construction Co., Inc.,* El Cajon, Calif. (N62473-14-D-0042) are each being awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity multiple award construction contract for new construction, renovation, and repair of general building construction at various locations within the Naval Facilities Engineering Command (NAVFAC) Southwest area of responsibility (AOR). The maximum dollar value including the base period and four option years for all five contracts combined is $99,000,000. Types of projects may include, but are not limited to: administration buildings, school buildings, hospitals, auditoriums, fire stations, gymnasiums, office buildings, hangars, laboratories, and parking structures. No task orders are being issued at this time. All work on these contracts will be performed within the NAVFAC Southwest AOR including, but not limited to, California (90 percent), Arizona (6 percent), Nevada (1 percent), Utah (1 percent), Colorado (1 percent), and New Mexico (1 percent). The terms of the contracts are not to exceed 60 months, with an expected completion date of April 2019. Fiscal 2014 operations and maintenance, Navy contract funds in the amount of $25,000 are being obligated on this award and will expire at the end of the current fiscal year. This contract was competitively procured as a set-aside for Historically Underutilized Business Zone and/or Service-Disabled Veteran-Owned Small Businesses via the Navy Electronic Commerce Online website, with 35 proposals received. These five contractors may compete for task orders under the terms and conditions of the awarded contracts. The Naval Facilities Engineering Command, Southwest, San Diego, Calif., is the contracting activity.
Lockheed Martin Mission Systems and Training, Moorestown, N.J., is being awarded a $45,351,395 modification to previously awarded contract (N00024-14-C-5114) to provide multi-year procurement funding for Aegis Weapon System MK 7 equipment sets. Work will be performed in Moorestown, N.J. (85.5 percent), Clearwater, Fla. (13.1 percent), and Akron, Ohio (1.4 percent) and is expected to be completed by September 2021. Fiscal 2014 shipbuilding and conversion, Navy funding in the amount of $45,351,395 will be obligated at time of award. Contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.
AIR FORCE
Lockheed Martin Coherent Technologies Inc., Louisville, Colo., has been awarded a $9,387,611 cost-plus-fixed-fee contract to develop a ground-based wind profiler to meet the functional, performance, and environmental requirements for precision airdrop. The objective of this effort is to develop an affordable, rugged, set-and-start solution for precise wind measurement for precision air drop (PAD) at forward operating bases that shall enable the government to achieve 50 meters drop accuracy. This technology development shall enable accurate wind measurements from the ground to altitudes near the aircraft, and shall contribute to all-weather accurate determination of the computed-air release point for a single-pass aircraft scenario for PAD. Work will be performed at Louisville, Colo., and is expected to be completed by Oct. 16, 2015. The award is a result of a competitive acquisition under an open-ended Broad Agency Announcement. Unlimited offers were solicited and one offer was received. Fiscal 2013 ($500,000) and fiscal 2014 ($1,819,300) research and development funds are being obligated at time of award. Air Force Research Laboratory/RQKPD, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8650-14-C-2444).
*Small Business
CONTRACTS
DEFENSE LOGISTICS AGENCY
Rosenbauer America,* Lyons, S.D., has been awarded a maximum $382,500,000 fixed-price with economic-price-adjustment contract for the procurement of commercial type fire and emergency vehicles. This contract is a competitive acquisition, and 24 offers were received. This contract is one of up to 20 contracts being issued against solicitation number SPM8EC-11-R-0005. This contract is for a term of five years and is for a portion of the estimated $382,500,000, and will be competed amongst other contractors who receive a contract under this solicitation. Request for quotations will be issued to all twenty and the resulting contract delivery order(s) will be awarded to the offerer with the lowest price that is technically acceptable. Locations of performance are South Dakota and Minnesota with an April 7, 2019 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 through fiscal 2019 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE8EC-14-D-0015).
Atlantic Diving Supply Inc.,* Virginia Beach, Va., has been awarded a maximum $66,783,068 modification (P00003) exercising the first option period on a one-year base contract (SPM2D0-13-D-0003) with nine one-year option periods for various medical/surgical products. This is a fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract. Location of performance is Virginia with an April 8, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 warstopper funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Henry Schein Inc., Melville, N.Y., has been awarded a maximum $26,602,450 modification (P00012) exercising the fourth option period on a one-year base contract (SPM2DE-10-D-7342) with four one-year option periods for various laboratory supplies. This is a fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract. Location of performance is New York with an April 25, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Labatt Food Service, San Antonio, Texas, has been awarded a maximum $17,250,000 modification (P00204) exercising the first option period on a one-year base contract (SPM300-13-D-3655) with one one-year option period for full line food distribution. This is a fixed-price with economic-price-adjustment, indefinite-quantity contract. Location of performance is Texas with an April 12, 2015 performance completion date. Using military services are Army and Air Force. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
Stern Produce Co.,* Phoenix, Ariz., has been awarded a maximum $16,625,000 fixed-price with economic-price-adjustment contract for fresh fruit and vegetables support. This is a competitive acquisition, and one offer was received. This is an 18-month base contract with two 18-month option periods. Location of performance is Arizona with an Oct. 12, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, federal civilian agencies, and Department of Agriculture schools and reservations. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE300-14-D-P255).
RPR Industries,* Grantsville, W.Va., has been awarded a maximum $11,601,492 firm-fixed-price contract for life preservers and component parts. This is a competitive acquisition, and two offers were received. This is a two-year base contract with three one-year option periods. Location of performance is West Virginia with a July 12, 2016 performance completion date. Using military service is Air Force. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE8EH-14-D-0007).
Exelan Pharmaceuticals Inc., Lawrenceville, Ga., has been awarded a maximum $8,509,384 firm-fixed-price contract for pharmaceutical products. This is a competitive acquisition, and four offers were received. This is a one-year base contract with four one-year option periods. Locations of performance are Georgia and New York with an April 7, 2015 performance completion date. Using services are federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPM2D0-14-D-N005).
ARMY
Savi Technology Inc.,* Alexandria, Va., was awarded a $102,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for Active Radio Frequency iIdentification hardware, software, documentation, and incidental services to authorized government users worldwide. Incidental services include training, warranty, and technical engineering services. Funding and work performance locations will be determined with each order. Estimated completion date is April 6, 2017. Bids were solicited via the Internet with one received. Army Contracting Command, Rock Island Arsenal, Ill., is the contracting activity (W52P1J-14-D-0014).
NAVY
Patricia I. Romero Inc., doing business as Pacific West Builders*, National City, Calif. (N62473-14-D-0038); Peter Vander Werff Construction Inc.,* El Cajon, Calif. (N62473-14-D-0039); Dimensions Construction Inc.*, San Diego, Calif. (N62473-14-D-0040); I.E.-Pacific Inc.,* San Diego, Calif. (N62473-14-D-0041); and Halbert Construction Co., Inc.,* El Cajon, Calif. (N62473-14-D-0042) are each being awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity multiple award construction contract for new construction, renovation, and repair of general building construction at various locations within the Naval Facilities Engineering Command (NAVFAC) Southwest area of responsibility (AOR). The maximum dollar value including the base period and four option years for all five contracts combined is $99,000,000. Types of projects may include, but are not limited to: administration buildings, school buildings, hospitals, auditoriums, fire stations, gymnasiums, office buildings, hangars, laboratories, and parking structures. No task orders are being issued at this time. All work on these contracts will be performed within the NAVFAC Southwest AOR including, but not limited to, California (90 percent), Arizona (6 percent), Nevada (1 percent), Utah (1 percent), Colorado (1 percent), and New Mexico (1 percent). The terms of the contracts are not to exceed 60 months, with an expected completion date of April 2019. Fiscal 2014 operations and maintenance, Navy contract funds in the amount of $25,000 are being obligated on this award and will expire at the end of the current fiscal year. This contract was competitively procured as a set-aside for Historically Underutilized Business Zone and/or Service-Disabled Veteran-Owned Small Businesses via the Navy Electronic Commerce Online website, with 35 proposals received. These five contractors may compete for task orders under the terms and conditions of the awarded contracts. The Naval Facilities Engineering Command, Southwest, San Diego, Calif., is the contracting activity.
Lockheed Martin Mission Systems and Training, Moorestown, N.J., is being awarded a $45,351,395 modification to previously awarded contract (N00024-14-C-5114) to provide multi-year procurement funding for Aegis Weapon System MK 7 equipment sets. Work will be performed in Moorestown, N.J. (85.5 percent), Clearwater, Fla. (13.1 percent), and Akron, Ohio (1.4 percent) and is expected to be completed by September 2021. Fiscal 2014 shipbuilding and conversion, Navy funding in the amount of $45,351,395 will be obligated at time of award. Contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.
AIR FORCE
Lockheed Martin Coherent Technologies Inc., Louisville, Colo., has been awarded a $9,387,611 cost-plus-fixed-fee contract to develop a ground-based wind profiler to meet the functional, performance, and environmental requirements for precision airdrop. The objective of this effort is to develop an affordable, rugged, set-and-start solution for precise wind measurement for precision air drop (PAD) at forward operating bases that shall enable the government to achieve 50 meters drop accuracy. This technology development shall enable accurate wind measurements from the ground to altitudes near the aircraft, and shall contribute to all-weather accurate determination of the computed-air release point for a single-pass aircraft scenario for PAD. Work will be performed at Louisville, Colo., and is expected to be completed by Oct. 16, 2015. The award is a result of a competitive acquisition under an open-ended Broad Agency Announcement. Unlimited offers were solicited and one offer was received. Fiscal 2013 ($500,000) and fiscal 2014 ($1,819,300) research and development funds are being obligated at time of award. Air Force Research Laboratory/RQKPD, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8650-14-C-2444).
*Small Business
NLRB ANNOUNCES VALERO SERVICES AGREES TO RESCIND UNLAWFUL SOCIAL MEDIA POLICY
FROM: NATIONAL LABOR RELATIONS BOARD
Valero Services agrees to rescind its nationwide social media policy
April 8, 2014
On April 7, 2014, Valero Services, Inc. agreed to rescind its nationwide social media policy and to post and mail a NLRB remedial notice to its employees throughout the country in response to a complaint filed by the National Labor Relations Board (NLRB). Valero Services provides employee leasing services to refineries and plants located throughout the United States, including a refinery located in Port Arthur, Texas.
The United Steelworkers of America filed an unfair labor practice charge with the NLRB Region 16, alleging that Valero Services social media policy interfered with employees’ rights to discuss their terms and conditions of employment on social media. Region 16 found merit to the allegations and issued complaint. During the hearing, Associate Chief Administrative Law Judge William N. Cates approved a settlement agreement resolving the dispute. Under the terms of the settlement, Valero Services agreed to notify employees that it will rescind its unlawful social media policy and to post NLRB notices at its 52 facilities nationwide, as well as to mail notices to employees, advising them that they will not be prohibited from using social media to discuss their terms and conditions of employment.
Valero Services agrees to rescind its nationwide social media policy
April 8, 2014
On April 7, 2014, Valero Services, Inc. agreed to rescind its nationwide social media policy and to post and mail a NLRB remedial notice to its employees throughout the country in response to a complaint filed by the National Labor Relations Board (NLRB). Valero Services provides employee leasing services to refineries and plants located throughout the United States, including a refinery located in Port Arthur, Texas.
The United Steelworkers of America filed an unfair labor practice charge with the NLRB Region 16, alleging that Valero Services social media policy interfered with employees’ rights to discuss their terms and conditions of employment on social media. Region 16 found merit to the allegations and issued complaint. During the hearing, Associate Chief Administrative Law Judge William N. Cates approved a settlement agreement resolving the dispute. Under the terms of the settlement, Valero Services agreed to notify employees that it will rescind its unlawful social media policy and to post NLRB notices at its 52 facilities nationwide, as well as to mail notices to employees, advising them that they will not be prohibited from using social media to discuss their terms and conditions of employment.
PRESIDENT OBAMA'S REMARKS ON EQUAL PAY FOR EQUAL WORK
FROM: THE WHITE HOUSE
Remarks by the President on Equal Pay for Equal Work
East Room
11:58 A.M. EDT
THE PRESIDENT: Thank you, everybody. (Applause.) All right. Well, thanks to my friend, Lilly Ledbetter, not only for that introduction but for fighting for a simple principle: Equal pay for equal work. It's not that complicated. And, Lilly, I assure you, you remain the face of fair pay. (Laughter.) People don't want my mug on there. (Laughter.) They want your face.
As Lilly mentioned, she did not set out to be a trailblazer. She was just somebody who was waking up every day, going to work, doing her job the best that she could. And then one day, she finds out, after years, that she earned less than her male colleagues for doing the same job. I want to make that point again. (Laughter.) Doing the same job. Sometimes when you -- when we discuss this issue of fair pay, equal pay for equal work, and the pay gap between men and women, you’ll hear all sorts of excuses about, well, they’re child-bearing, and they’re choosing to do this, and they’re this and they’re that and the other. She was doing the same job -- probably doing better. (Laughter and applause.) Same job. Working just as hard, probably putting in more hours. But she was getting systematically paid less.
And so she set out to make sure this country lived up to its founding, the idea that all of us are created equal. And when the courts didn’t answer her call, Congress did.
The first time Lilly and I stood together in this room was my tenth day in office, and that's when we signed the Lilly Ledbetter Fair Pay Act. (Applause.) First bill I signed into law. And some of the leaders who helped make that happen are here today, including Leader Pelosi and Senator Mikulski and Congresswoman DeLauro. (Applause.) I want to thank all the members of Congress and all the state legislators who are here and all the advocates who are here, because you all contributed to that effort. And I want to give a special thanks to the members of the National Equal Pay Task Force, who’ve done outstanding work to make workplaces across America more fair.
We’re here because today is Equal Pay Day. (Applause.) Equal Pay Day. And it's nice to have a day, but it's even better to have equal pay. (Applause.) And our job is not finished yet. Equal Pay Day means that a woman has to work about this far into 2014 to earn what a man earned in 2013. Think about that. A woman has got to work about three more months in order to get what a man got because she’s paid less. That's not fair. That’s like adding an extra six miles to a marathon. (Laughter.) It’s not right.
We’re here because today is Equal Pay Day. (Applause.) Equal Pay Day. And it's nice to have a day, but it's even better to have equal pay. (Applause.) And our job is not finished yet. Equal Pay Day means that a woman has to work about this far into 2014 to earn what a man earned in 2013. Think about that. A woman has got to work about three more months in order to get what a man got because she’s paid less. That's not fair. That’s like adding an extra six miles to a marathon. (Laughter.) It’s not right.
AUDIENCE MEMBER: Ain’t right.
THE PRESIDENT: Ain’t right. (Laughter.) It's not right and it ain’t right. (Laughter.)
America should be a level playing field, a fair race for everybody -- a place where anybody who’s willing to work hard has a chance to get ahead. And restoring that opportunity for every American -- men and women -- has to be a driving focus for our country.
Now, the good news is today our economy is growing; businesses have created almost 9 million new jobs over the past four years. More than 7 million Americans have signed up for health care coverage under the Affordable Care Act. (Applause.)
That’s a good thing, too. I know it’s Equal Pay Day and not Obamacare Day -- (laughter) -- but I do want to point out that the Affordable Care Act guarantees free preventive care, like mammograms and contraceptive care, for tens of millions of women, and ends the days when you could be charged more just for being a woman when it comes to your health insurance. (Applause.) And that’s true for everybody. (Applause.) That’s just one more place where things were not fair.
That’s a good thing, too. I know it’s Equal Pay Day and not Obamacare Day -- (laughter) -- but I do want to point out that the Affordable Care Act guarantees free preventive care, like mammograms and contraceptive care, for tens of millions of women, and ends the days when you could be charged more just for being a woman when it comes to your health insurance. (Applause.) And that’s true for everybody. (Applause.) That’s just one more place where things were not fair.
We’ll talk about drycleaners next, right -- (laughter) -- because I know that -- I don’t know why it costs more for Michelle’s blouse than my shirt. (Laughter.)
But we’ve got to make sure that America works for everybody. Anybody who is willing to work hard, they should be able to get ahead. And we’ve got to build an economy that works for everybody, not just those at the top. Restoring opportunity for all has to be our priority. That’s what America is about. It doesn’t matter where you started off, what you look like -- you work hard, you take responsibility, you make the effort, you should be able to get ahead.
And we’ve got to fight for an opportunity agenda, which means more good jobs that pay good wages, and training Americans to make sure that they can fill those jobs, and guaranteeing every child a world-class education, and making sure the economy rewards hard work for every single American.
And part of that is fighting for fair pay for women -- because when women succeed, America succeeds. (Applause.) When women succeed, America succeeds. It’s true. I believe that. (Applause.) It’s true. It’s true. It's true.
Now, here’s the challenge: Today, the average full-time working woman earns just 77 cents for every dollar a man earns; for African American women, Latinas, it’s even less. And in 2014, that’s an embarrassment. It is wrong. And this is not just an issue of fairness. It’s also a family issue and an economic issue, because women make up about half of our workforce and they’re increasingly the breadwinners for a whole lot of families out there. So when they make less money, it means less money for gas, less money for groceries, less money for child care, less money for college tuition, less money is going into retirement savings.
And it’s all bad for business, because our economy depends on customers out there, and when customers have less money, when hardworking women don’t have the resources, that’s a problem. When businesses lose terrific women talent because they’re fed up with unfair policies, that’s bad for business. They lose out on the contributions that those women could be making. When any of our citizens can’t fulfill their potential for reasons that have nothing to do with their talent or their character or their work ethic, we’re not living up to our founding values. We don’t have second-class citizens in this country -- and certainly not in the workplace.
So, tomorrow, the Senate has the chance to start making this right by passing a bill that Lilly already alluded to -- the Paycheck Fairness Act. (Applause.) They’ve got a chance to do the right thing. And it would put sensible rules into place, like making sure employees who discuss their salaries don’t face retaliation by their employers.
And here’s why this is important. There are women here today who worked in offices where it was against the rules for employees to discuss salaries with one another. And because of that, they didn’t know they were being paid less than men -- just like Lilly didn’t know -- for doing the exact same work. For some, it was years before they found out. And even then, it only happened because a manager accidentally let it slip or, as in Lilly’s case, a sympathetic co-worker quietly passed a note. She only found out she earned less than her male colleagues for doing the same work because somebody left an anonymous note.
We can’t leave that to chance. And over the course of Lilly’s career, she lost more than $200,000 in salary, even more in pension and Social Security benefits -- both of which are pegged to salary -- simply because she was a woman.
And Lilly, and some of the other women here, decided it was wrong, set out to fix it. They went to their bosses; they asked for a raise. That didn’t work. They turned to the law; they filed suit. And for some, for years after waiting and persisting they finally got some justice.
Well, tomorrow, the Senate could pay tribute to their courage by voting yes for paycheck fairness. (Applause.) This should not be a hard proposition. This should not be that complicated. (Applause.)
And so far, Republicans in Congress have been gumming up the works. They’ve been blocking progress on this issue, and of course other issues that would help with the economic recovery and help us grow faster. But we don’t have to accept that. America, you don’t have to sit still. You can make sure that you’re putting some pressure on members of Congress about this issue. And I don’t care whether you’re a Democrat or a Republican. If you’re a voter -- if you’ve got a daughter, you got a sister, you got a mom -- I know you got a mom -- (laughter) -- this is something you should care about.
And I’m not going to stand still either. So in this year of action I’ve used my executive authority whenever I could to create opportunity for more Americans. And today, I’m going to take action -- executive action -- to make it easier for working women to earn fair pay. So first, I’m going to sign an executive order to create more pay transparency by prohibiting federal contractors from retaliating against employees who discuss their pay with each other. (Applause.) Pay secrecy fosters discrimination and we should not tolerate it -- not in federal contracting or anywhere else.
Well, tomorrow, the Senate could pay tribute to their courage by voting yes for paycheck fairness. (Applause.) This should not be a hard proposition. This should not be that complicated. (Applause.)
And so far, Republicans in Congress have been gumming up the works. They’ve been blocking progress on this issue, and of course other issues that would help with the economic recovery and help us grow faster. But we don’t have to accept that. America, you don’t have to sit still. You can make sure that you’re putting some pressure on members of Congress about this issue. And I don’t care whether you’re a Democrat or a Republican. If you’re a voter -- if you’ve got a daughter, you got a sister, you got a mom -- I know you got a mom -- (laughter) -- this is something you should care about.
And I’m not going to stand still either. So in this year of action I’ve used my executive authority whenever I could to create opportunity for more Americans. And today, I’m going to take action -- executive action -- to make it easier for working women to earn fair pay. So first, I’m going to sign an executive order to create more pay transparency by prohibiting federal contractors from retaliating against employees who discuss their pay with each other. (Applause.) Pay secrecy fosters discrimination and we should not tolerate it -- not in federal contracting or anywhere else.
Second, I’m signing a presidential memorandum directing the Department of Labor and our outstanding Secretary of Labor, Tom Perez, to require federal contractors to provide data about their employee compensation so pay discrimination can be spotted more easily.
Now, I want to be clear: There are great employers out there who do the right thing. There are plenty of employers out there who are absolutely certain that there’s no pay discrimination happening in their offices. But then sometimes when the data is laid out, it paints a different picture. Many times they then do everything they can to fix the problem, and so we want to encourage them to fix these problems if they exist by making sure that the data is out there.
So everybody who cares about this should pay attention to how the Senate votes tomorrow on this paycheck fairness act, because the majority of senators support this bill, but two years ago, a minority of Senate Republicans blocked it from getting a vote. Even worse, some commentators are out there saying that the pay gap doesn’t even exist. They say it’s a myth. But it’s not a myth; it’s math. (Laughter and applause.) You can look at the paychecks. You can look at the stubs. (Applause.)
I mean, Lilly Ledbetter didn’t just make this up. (Laughter.) The court, when it looked at the documents, said, yep, you’ve been getting paid less for doing the same job. It’s just the court then said, you know, it’s been -- as Lilly said -- it’s been happening so long, you can’t do anything about it anymore -- which made no sense and that’s why we had to sign another bill. It’s basic math that adds up to real money. It makes a real difference for a lot of Americans who are working hard to support their families.
And of course, the fact that we’ve got some resistance from some folks on this issue up on Capitol Hill just fits with this larger problem, this vision that the congressional Republicans seem to be continually embracing -- this notion that, you know what, you’re just on your own, no matter how unfair things are. You see it in their budget. The budget the Republicans in Congress just put forward last week, it’s like a bad rerun. It would give massive tax cuts to households making more than a million dollars a year, force deep cuts to things that actually help working families like early education and college grants and job training.
And, of course, it includes that novel idea of repealing the Affordable Care Act. (Laughter.) Fiftieth time they’ve tried that -- which would mean the more than 7 million Americans who’ve done the responsible thing and signed up to buy health insurance, they’d lose their health insurance; and the 3 million young adults who’ve stayed on their parents’ plan, they’d no longer have that available; take us back to the days when insurers could charge women more just for being a woman.
On minimum wage, three out of four Americans support raising the minimum wage. Usually when three out of four Americans support something, members of Congress are right there. (Laughter.) And yet here, Republicans in Congress are dead set against it, blocking a pay raise for tens of millions of Americans -- a majority of them women. This isn’t just about treating women fairly. This is about Republicans seemingly opposing any efforts to even the playing field for working families.
And I was up in Michigan last week and I just asked -- I don’t understand fully the theory behind this. I don’t know why you would resist the idea that women should be paid the same as men, and then deny that that’s not always happening out there. If Republicans in Congress want to prove me wrong, if they want to show that they, in fact, do care about women being paid the same as men, then show me. They can start tomorrow. They can join us in this, the 21st century, and vote yes on the Paycheck Fairness Act. (Applause.) Vote yes.
And if anybody is watching or listening, if you care about this issue, then let your senators know where you stand -- because America deserves equal pay for equal work.
This is not something we’re going to achieve in a day. There’s going to be a lot of stuff that we’ve got to do to close the pay gap. We got to make it possible for more women to enter high-paying fields that up until now have been dominated by men, like engineering and computer science. Women hold less than 6 percent of our country’s commercial patents -- that’s not good enough. We need more parents and high school teachers and college professors encouraging girls and women to study math and science. We need more businesses to make gender diversity a priority when they hire and when they promote. Fewer than five percent of Fortune 500 companies have women at the helm.
I think we’d all agree that we need more women in Congress. (Applause.) Fewer than 20 percent of congressional seats are held by women. Clearly, Congress would get more done if the ratio was -- (laughter) -- evened out a little bit. So we’ve got to work on that.
And we’ve all got to do more to make our workplaces more welcoming to women. Because the numbers show that even when men and women are in the same profession and have the same education, there’s still a wage gap, and it widens over time. So we’re going to keep making the case for why these policies are the right ones for working families and businesses. And this is all going to lead up to this first-ever White House Summit on Working Families on June 23rd.
So, ultimately, equal pay is not just an economic issue for millions of Americans and their families. It’s also about whether we’re willing to build an economy that works for everybody, and whether we’re going to do our part to make sure that our daughters have the same chances to pursue their dreams as our sons, and whether or not we’re willing to restore to the heart of this country that basic idea -- you can make it, no matter who you are, if you try.
And that’s personal for me. I’ve said this before -- I’ve got two daughters and I expect them to be treated just like anybody’s sons. And I think about my single mom working hard, going to school, trying to raise two kids all at the same time. And I think about my grandmother trying to work her way up through her career and then hitting the glass ceiling. And I’ve seen how hard they’ve worked, and I’ve seen how they’ve sucked it up. And they put up with stuff and they don’t say anything, and they just take care of their family and they take care of themselves, and they don’t complain a lot. But at a certain point, we have the power to do something about it for the next generation. And this is a good place to start.
So, for everybody out there who’s listening, ask your senator where you stand on paycheck fairness. (Applause.) If they tell you that there’s not a pay gap out there, you tell them to look at the data, because there is. It’s time to get this done. And I’m going to do my small part right now by signing this executive order and presidential memoranda. (Applause.)
END
12:18 P.M. EDT
12:18 P.M. EDT
AG HOLDER TESTIFIES BEFORE HOUSE COMMITTEE ON THE JUDICIARY
FROM: U.S. JUSTICE DEPARTMENT
Attorney General Eric Holder Testifies Before the U.S. House Committee on the Judiciary
~ Tuesday, April 8, 2014
Chairman [Bob] Goodlatte, Ranking Member [John] Conyers, and Members of the Committee: thank you for the opportunity to appear before you today to discuss the recent achievements of the U.S. Department of Justice; to join you in advancing our ongoing priorities; and to stress, on behalf of my hardworking colleagues in Department offices around the world, our continued commitment to the cause of justice and the missions we share: securing our nation and protecting the American people.
This is, and will always be, our top priority. And over the past year, the Department has done important work in this regard – strengthening our ability to safeguard America’s national security, to disrupt potential terrorist plots, and to ensure that those who attempt to harm our nation, its vital interests, or its people can be held accountable to the fullest extent of the law.
Last month, the Department achieved a major milestone when we secured the conviction of Sulaiman Abu Ghayth, the son-in-law of Usama bin Laden and a senior member of al Qaeda, on terrorism-related charges. This verdict has proven that proceedings such as these can safely occur in the city I am proud to call my hometown, as in other locations across our great nation. We never doubted the ability of our Article III court system to administer justice swiftly in this case, as it has in hundreds of other cases involving terrorism defendants. And it would be a good thing for the country if this case has the result of putting that political debate to rest.
Last week, the Senate Intelligence Committee voted to declassify key portions of its report into past interrogations practices. I agree that as much of the report as possible should be made public, of course allowing for redactions necessary to protect national security. So I was pleased the Committee voted to send portions of the report forward for declassification. Having prohibited these practices upon taking office, the President believes that bringing this program into the light will help the American people understand what happened in the past and can help guide us as we move forward, so that no Administration contemplates such a program in the future.
Beyond our national security work, the Department will continue to build on the progress we’ve made in confronting a range of threats and challenges. The full resources of the Department and the FBI have been made available to help conduct a thorough investigation into last week’s horrific mass shooting at Fort Hood. And going forward, my colleagues and I will do everything possible to achieve justice for our brave men and women in uniform – and prevent these far-too-common tragedies from happening again.
More than ever before, the Department’s law enforcement work today must contend with new and emerging technology, including virtual currencies such as Bitcoin. Virtual currencies can pose challenges for law enforcement given the appeal they have among those seeking to conceal illegal activity. This potential must be closely considered. We are working with our financial regulatory partners to account for this emerging technology. Those who favor virtual currencies solely for their ability to help mask drug trafficking or other illicit conduct should think twice; the Department is committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals’ ability to move funds anonymously. As virtual currency systems develop, it will be imperative to law enforcement interests that those systems comply with applicable anti-money laundering statutes and know-your-customer controls.
Across the board, the Department’s comprehensive efforts reflect our commitment to integrity and equal justice – in every case and circumstance. And nowhere is this commitment stronger than in our work to strengthen America’s federal criminal justice system. Through the Smart on Crime initiative I announced last August, my colleagues and I are taking action on a number of evidence-based reforms – including modifications to the Department’s charging policies with regard to mandatory minimum sentences for certain nonviolent, low-level drug crimes. This commonsense change will ensure that the toughest penalties are reserved for the most dangerous or violent drug traffickers. And I’m pleased to note that Members of this Committee have shown tremendous leadership in the effort to codify this approach into law.
I’ve been proud to join many of you in supporting the bipartisan Smarter Sentencing Act – introduced by Representatives Scott and Labrador and cosponsored by Ranking Member Conyers – which would give judges more discretion in determining appropriate sentences for people convicted of certain federal drug crimes. And I pledge to keep working with leaders like you – and like Senator Rand Paul and others – to address the collateral consequences of certain convictions, including felony disenfranchisement policies that permanently deny formerly incarcerated people their right to vote.
We will never be able to simply arrest and incarcerate our way to becoming a safer nation. That’s why we need to be both tough and smart in our fight against crime and the conditions and behaviors that breed it. And this struggle must extend beyond our fight to combat gun-, gang-, and drug-fueled violence – to include civil rights violations and financial and health care fraud crimes that harm people and endanger the livelihoods of hardworking Americans from coast to coast.
Last November, the Justice Department secured a major victory in this struggle when we obtained a $13 billion settlement with JPMorgan Chase & Co. – the largest settlement with a single entity in American history – to resolve federal and state civil claims related to the company’s mortgage securitization process. As part of our ongoing efforts to hold accountable those whose conduct contributed to the mortgage crisis, the Department also filed a lawsuit against the ratings firm S&P. And with the $1.2 billion agreement we reached with Toyota last month – the largest criminal penalty ever imposed on an automotive company – we’re making good on our determination to protect consumers and address fraud in all its forms.
Moving forward, my colleagues and I will continue to build upon these and other important efforts. And we’ll keep working alongside Members of Congress, including Ranking Member Conyers, Representative Sensenbrenner, and Representative Lewis, to address the void that has been left by last year’s Supreme Court decision invalidating one of the Voting Rights Act’s core provisions – so we can help protect that most basic right of American citizenship.
I thank you, once again, for the chance to discuss these and other priorities with you today – and for your continued support of the Justice Department’s critical efforts. I look forward to working closely with you to build upon the public safety and law enforcement accomplishments my colleagues have made possible in recent years. And I would be happy to answer any questions you may have.
Attorney General Eric Holder Testifies Before the U.S. House Committee on the Judiciary
~ Tuesday, April 8, 2014
Chairman [Bob] Goodlatte, Ranking Member [John] Conyers, and Members of the Committee: thank you for the opportunity to appear before you today to discuss the recent achievements of the U.S. Department of Justice; to join you in advancing our ongoing priorities; and to stress, on behalf of my hardworking colleagues in Department offices around the world, our continued commitment to the cause of justice and the missions we share: securing our nation and protecting the American people.
This is, and will always be, our top priority. And over the past year, the Department has done important work in this regard – strengthening our ability to safeguard America’s national security, to disrupt potential terrorist plots, and to ensure that those who attempt to harm our nation, its vital interests, or its people can be held accountable to the fullest extent of the law.
Last month, the Department achieved a major milestone when we secured the conviction of Sulaiman Abu Ghayth, the son-in-law of Usama bin Laden and a senior member of al Qaeda, on terrorism-related charges. This verdict has proven that proceedings such as these can safely occur in the city I am proud to call my hometown, as in other locations across our great nation. We never doubted the ability of our Article III court system to administer justice swiftly in this case, as it has in hundreds of other cases involving terrorism defendants. And it would be a good thing for the country if this case has the result of putting that political debate to rest.
Last week, the Senate Intelligence Committee voted to declassify key portions of its report into past interrogations practices. I agree that as much of the report as possible should be made public, of course allowing for redactions necessary to protect national security. So I was pleased the Committee voted to send portions of the report forward for declassification. Having prohibited these practices upon taking office, the President believes that bringing this program into the light will help the American people understand what happened in the past and can help guide us as we move forward, so that no Administration contemplates such a program in the future.
Beyond our national security work, the Department will continue to build on the progress we’ve made in confronting a range of threats and challenges. The full resources of the Department and the FBI have been made available to help conduct a thorough investigation into last week’s horrific mass shooting at Fort Hood. And going forward, my colleagues and I will do everything possible to achieve justice for our brave men and women in uniform – and prevent these far-too-common tragedies from happening again.
More than ever before, the Department’s law enforcement work today must contend with new and emerging technology, including virtual currencies such as Bitcoin. Virtual currencies can pose challenges for law enforcement given the appeal they have among those seeking to conceal illegal activity. This potential must be closely considered. We are working with our financial regulatory partners to account for this emerging technology. Those who favor virtual currencies solely for their ability to help mask drug trafficking or other illicit conduct should think twice; the Department is committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals’ ability to move funds anonymously. As virtual currency systems develop, it will be imperative to law enforcement interests that those systems comply with applicable anti-money laundering statutes and know-your-customer controls.
Across the board, the Department’s comprehensive efforts reflect our commitment to integrity and equal justice – in every case and circumstance. And nowhere is this commitment stronger than in our work to strengthen America’s federal criminal justice system. Through the Smart on Crime initiative I announced last August, my colleagues and I are taking action on a number of evidence-based reforms – including modifications to the Department’s charging policies with regard to mandatory minimum sentences for certain nonviolent, low-level drug crimes. This commonsense change will ensure that the toughest penalties are reserved for the most dangerous or violent drug traffickers. And I’m pleased to note that Members of this Committee have shown tremendous leadership in the effort to codify this approach into law.
I’ve been proud to join many of you in supporting the bipartisan Smarter Sentencing Act – introduced by Representatives Scott and Labrador and cosponsored by Ranking Member Conyers – which would give judges more discretion in determining appropriate sentences for people convicted of certain federal drug crimes. And I pledge to keep working with leaders like you – and like Senator Rand Paul and others – to address the collateral consequences of certain convictions, including felony disenfranchisement policies that permanently deny formerly incarcerated people their right to vote.
We will never be able to simply arrest and incarcerate our way to becoming a safer nation. That’s why we need to be both tough and smart in our fight against crime and the conditions and behaviors that breed it. And this struggle must extend beyond our fight to combat gun-, gang-, and drug-fueled violence – to include civil rights violations and financial and health care fraud crimes that harm people and endanger the livelihoods of hardworking Americans from coast to coast.
Last November, the Justice Department secured a major victory in this struggle when we obtained a $13 billion settlement with JPMorgan Chase & Co. – the largest settlement with a single entity in American history – to resolve federal and state civil claims related to the company’s mortgage securitization process. As part of our ongoing efforts to hold accountable those whose conduct contributed to the mortgage crisis, the Department also filed a lawsuit against the ratings firm S&P. And with the $1.2 billion agreement we reached with Toyota last month – the largest criminal penalty ever imposed on an automotive company – we’re making good on our determination to protect consumers and address fraud in all its forms.
Moving forward, my colleagues and I will continue to build upon these and other important efforts. And we’ll keep working alongside Members of Congress, including Ranking Member Conyers, Representative Sensenbrenner, and Representative Lewis, to address the void that has been left by last year’s Supreme Court decision invalidating one of the Voting Rights Act’s core provisions – so we can help protect that most basic right of American citizenship.
I thank you, once again, for the chance to discuss these and other priorities with you today – and for your continued support of the Justice Department’s critical efforts. I look forward to working closely with you to build upon the public safety and law enforcement accomplishments my colleagues have made possible in recent years. And I would be happy to answer any questions you may have.
SMALL BUSINESS ADMINISTRATION ANNOUNCES NATIONAL SMALL BUSINESS WEEK
FROM: U.S. SMALL BUSINESS ADMINISTRATION
SBA Announces National Small Business Week Week-long, cross-country events to feature entrepreneurship forums on business start-up and growth; Naming of National Small Business Person of the Year; Event registration now open
WASHINGTON – Aspiring entrepreneurs, small business owners and others are invited to attend the U.S. Small Business Administration’s National Small Business Week events held May 12-16, 2014.
Every year since 1963, the U.S. Small Business Administration takes the opportunity to highlight the impact of outstanding entrepreneurs, small business owners, and others from across the nation through National Small Business Week. This year, events will take place across the country to engage the small business community and highlight their importance as innovators and job creators who strengthen the nation’s economy.
Activities will include forums and panels discussing trends in small business, business innovation, financing, growth, matchmaking events, as well as networking opportunities and award ceremonies. National Small Business Week will culminate in Washington, D.C., where the 2014 National Small Business Person of the Year will be named. Candidates from all 50 states, the District of Columbia, Guam and Puerto Rico will be competing for the award. Small business owners and their employees who attend will interact with federal government officials, local elected leaders, representatives from national businesses and other small business experts.
The cities and dates for National Small Business Week are as follows:
• San Francisco – May 12
• Kansas City – May 13
• Boston and Washington, D.C. – May 15
• Washington, D.C. – May 16
Throughout the week there will also be webinars and other live events.
SBA Announces National Small Business Week Week-long, cross-country events to feature entrepreneurship forums on business start-up and growth; Naming of National Small Business Person of the Year; Event registration now open
WASHINGTON – Aspiring entrepreneurs, small business owners and others are invited to attend the U.S. Small Business Administration’s National Small Business Week events held May 12-16, 2014.
Every year since 1963, the U.S. Small Business Administration takes the opportunity to highlight the impact of outstanding entrepreneurs, small business owners, and others from across the nation through National Small Business Week. This year, events will take place across the country to engage the small business community and highlight their importance as innovators and job creators who strengthen the nation’s economy.
Activities will include forums and panels discussing trends in small business, business innovation, financing, growth, matchmaking events, as well as networking opportunities and award ceremonies. National Small Business Week will culminate in Washington, D.C., where the 2014 National Small Business Person of the Year will be named. Candidates from all 50 states, the District of Columbia, Guam and Puerto Rico will be competing for the award. Small business owners and their employees who attend will interact with federal government officials, local elected leaders, representatives from national businesses and other small business experts.
The cities and dates for National Small Business Week are as follows:
• San Francisco – May 12
• Kansas City – May 13
• Boston and Washington, D.C. – May 15
• Washington, D.C. – May 16
Throughout the week there will also be webinars and other live events.
SEC CHARGES CVS CAREMARK CORP. WITH MISLEADING INVESTORS
FROM: SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged CVS Caremark Corp. with misleading investors about significant financial setbacks and using improper accounting that artificially boosted its financial performance.
CVS has agreed to pay $20 million to settle the charges.
According to the SEC’s complaint filed in federal court in Rhode Island, CVS has two business segments as a pharmacy benefits manager and a retail chain of drug stores. In offering documents for a $1.5 billion bond offering in 2009, CVS fraudulently omitted that it had recently lost significant Medicare Part D and contract revenues in the pharmacy benefits segment. Investors were therefore misled about the expected future financial results for that line of business. When CVS eventually revealed the full extent of the setbacks on Nov. 5, 2009, its stock price fell 20 percent in one day. CVS further misled investors on an earnings call that same day by maintaining there was a slight improvement in its “retention rate,” which is a key metric of retained business often used to compare pharmacy benefits management companies. But CVS omitted the fact that it had manipulated how it calculated the rate and concealed the full extent of its lost business.
“CVS broke faith with investors in both its stock and its bonds by disguising significant setbacks for its pharmacy benefits management business,” said Andrew Ceresney, director of the SEC’s Division of Enforcement. “The intentional misconduct by CVS breached the core principle of fair and accurate reporting of financial performance.”
The SEC’s complaint further alleges that CVS made improper accounting adjustments that overstated the financial results for its retail pharmacy line of business. During the same 2009 timeframe, CVS altered the accounting treatment for its acquisition of another drug store chain – Longs Drugs – and failed to disclose the adjustments in its quarterly report filed on November 5. CVS improperly reduced the value of $189 million of personal property in the Longs stores down to $0, and then reversed $49 million of depreciation that had been taken on those assets since the acquisition. The undisclosed depreciation reversal increased the third-quarter earnings and enabled CVS to exceed analysts’ expectations at a time when it was otherwise announcing significant bad news about earnings projections in its pharmacy benefits line of business.
The SEC alleges that the improper accounting adjustments were orchestrated by Laird Daniels, who was the retail controller at CVS and is charged with accounting violations in a related SEC administrative proceeding. According to the SEC’s order against Daniels, proper accounting would have treated the asset write-down as a current period expense, and the third quarter earnings per share for CVS would have been reduced by as much as 17 percent. As Daniels described in an e-mail, the dramatic change in accounting turned the acquisition of Longs Drugs from a “bad guy” to a “good guy” in terms of purported profitability for CVS.
“The accounting standards are designed to provide the public with a fair and consistent measure of public company performance. Instead, CVS and Daniels used improper accounting tactics to give investors a misleading picture of the company’s retail pharmacy earnings,” said Paul Levenson, director of the SEC’s Boston Regional Office.
Daniels has agreed to settle the administrative case against him by paying a $75,000 penalty and being barred for at least one year from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC. Without admitting or denying the allegations, Daniels agreed to the entry of a cease-and-desist order finding that he willfully violated Sections 17(a)(2) and (3) of the Securities Act of 1933 and Rule 13b2-1 under the Securities Exchange Act of 1934. The order finds that Daniels willfully aided, abetted, and caused violations by CVS of the reporting, books and records, and internal control provisions of the federal securities laws.
The SEC’s complaint charges CVS with violations of Section 10(b) of the Exchange Act and Rule 10b-5, and Section 17(a) of the Securities Act. CVS also is charged with violations of the reporting, books and records, and internal control provisions of the federal securities laws. In addition to the $20 million penalty, CVS consented to the entry of a final judgment permanently enjoining the company from violating various anti-fraud, books and records, and internal control provisions of the securities laws. CVS neither admitted nor denied the allegations. The settlement is subject to court approval.
The SEC’s investigation was conducted by Marc Jones, Ruth Anne Heselbarth, Frank Huntington, Amy Gwiazda, and Kevin Currid of the Boston Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
The Securities and Exchange Commission today charged CVS Caremark Corp. with misleading investors about significant financial setbacks and using improper accounting that artificially boosted its financial performance.
CVS has agreed to pay $20 million to settle the charges.
According to the SEC’s complaint filed in federal court in Rhode Island, CVS has two business segments as a pharmacy benefits manager and a retail chain of drug stores. In offering documents for a $1.5 billion bond offering in 2009, CVS fraudulently omitted that it had recently lost significant Medicare Part D and contract revenues in the pharmacy benefits segment. Investors were therefore misled about the expected future financial results for that line of business. When CVS eventually revealed the full extent of the setbacks on Nov. 5, 2009, its stock price fell 20 percent in one day. CVS further misled investors on an earnings call that same day by maintaining there was a slight improvement in its “retention rate,” which is a key metric of retained business often used to compare pharmacy benefits management companies. But CVS omitted the fact that it had manipulated how it calculated the rate and concealed the full extent of its lost business.
“CVS broke faith with investors in both its stock and its bonds by disguising significant setbacks for its pharmacy benefits management business,” said Andrew Ceresney, director of the SEC’s Division of Enforcement. “The intentional misconduct by CVS breached the core principle of fair and accurate reporting of financial performance.”
The SEC’s complaint further alleges that CVS made improper accounting adjustments that overstated the financial results for its retail pharmacy line of business. During the same 2009 timeframe, CVS altered the accounting treatment for its acquisition of another drug store chain – Longs Drugs – and failed to disclose the adjustments in its quarterly report filed on November 5. CVS improperly reduced the value of $189 million of personal property in the Longs stores down to $0, and then reversed $49 million of depreciation that had been taken on those assets since the acquisition. The undisclosed depreciation reversal increased the third-quarter earnings and enabled CVS to exceed analysts’ expectations at a time when it was otherwise announcing significant bad news about earnings projections in its pharmacy benefits line of business.
The SEC alleges that the improper accounting adjustments were orchestrated by Laird Daniels, who was the retail controller at CVS and is charged with accounting violations in a related SEC administrative proceeding. According to the SEC’s order against Daniels, proper accounting would have treated the asset write-down as a current period expense, and the third quarter earnings per share for CVS would have been reduced by as much as 17 percent. As Daniels described in an e-mail, the dramatic change in accounting turned the acquisition of Longs Drugs from a “bad guy” to a “good guy” in terms of purported profitability for CVS.
“The accounting standards are designed to provide the public with a fair and consistent measure of public company performance. Instead, CVS and Daniels used improper accounting tactics to give investors a misleading picture of the company’s retail pharmacy earnings,” said Paul Levenson, director of the SEC’s Boston Regional Office.
Daniels has agreed to settle the administrative case against him by paying a $75,000 penalty and being barred for at least one year from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC. Without admitting or denying the allegations, Daniels agreed to the entry of a cease-and-desist order finding that he willfully violated Sections 17(a)(2) and (3) of the Securities Act of 1933 and Rule 13b2-1 under the Securities Exchange Act of 1934. The order finds that Daniels willfully aided, abetted, and caused violations by CVS of the reporting, books and records, and internal control provisions of the federal securities laws.
The SEC’s complaint charges CVS with violations of Section 10(b) of the Exchange Act and Rule 10b-5, and Section 17(a) of the Securities Act. CVS also is charged with violations of the reporting, books and records, and internal control provisions of the federal securities laws. In addition to the $20 million penalty, CVS consented to the entry of a final judgment permanently enjoining the company from violating various anti-fraud, books and records, and internal control provisions of the securities laws. CVS neither admitted nor denied the allegations. The settlement is subject to court approval.
The SEC’s investigation was conducted by Marc Jones, Ruth Anne Heselbarth, Frank Huntington, Amy Gwiazda, and Kevin Currid of the Boston Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
U.S. STATEMENT ON TREATMENT OF ROMA PEOPLE ON INTERNATIONAL ROMA DAY
| FROM: U.S. STATE DEPARTMENT
04/08/2014 01:12 PM EDT
International Roma Day
John Kerry
Secretary of State
Washington, DC
April 8, 2014
Today of all days, all the American people are particularly thinking of the Roma around the world. We celebrate the rich Romani culture and contributions to our societies in Europe, the United States, and beyond. We also renew our commitment to remove the obstacles that keep millions of Roma on the margins of society and prevent them from realizing their full potential.
We each have a responsibility to speak out against hateful anti-Roma rhetoric and all forms of violence, wherever they occur. We must help provide Romani communities the opportunities they need to build a better future for their families. The United States will continue to work with our European and international partners to promote tolerance, dignity, and equal treatment for all Roma. |
THE LARGEST CRYSTAL OF GOLD
FROM: LOS ALAMOS NATIONAL LABORATORY
World’s Largest Single Crystal of Gold Verified at Los Alamos
Lujan Center neutron diffraction team confirms structure
LOS ALAMOS, N.M., April 7, 2014—When geologist John Rakovan needed better tools to investigate whether a dazzling 217.78-gram piece of gold was in fact the world’s largest single-crystal specimen—a distinguishing factor that would not only drastically increase its market value but also provide a unique research opportunity—he traveled to Los Alamos National Laboratory’s Lujan Neutron Scattering Center to peer deep inside the mineral using neutron diffractometry. Neutrons, different from other probes such as X-rays and electrons, are able to penetrate many centimeters deep into most materials.
“The structure or atomic arrangement of gold crystals of this size has never been studied before, and we have a unique opportunity to do so,” the Miami University professor said.
Revealing the inner structure of a crystal without destroying the sample—imperative, as this one is worth an estimated $1.5 million—would allow Rakovan and Lujan Center collaborators to prove that this exquisite nugget, which seemed almost too perfect and too big to be real, was a single crystal and hence a creation of nature. Its owner, who lives in the United States, provided the samples to Rakovan to assess the crystallinity of four specimens, all of which had been found decades ago in Venezuela.
During the past Lujan Center user run cycle, Heinz Nakotte, New Mexico State University professor and lead scientist for the single-crystal diffraction (SCD) instrument, and Sven Vogel, instrument scientist for the high-pressure/preferred orientation (HIPPO) instrument, helped Rakovan probe the stunning pieces at Los Alamos. The authors are preparing a scientific report.
Three of the four samples turned out to be single-crystal pieces of gold, rather than the commonplace multiple-crystal type. Of particular interest was a golf-ball-shaped nugget that at one time was believed to be the world’s largest trapezohedral gold crystal. In 2006 the crystal had been rejected at auction over questions of authenticity, and indeed, the Los Alamos instruments confirmed that it was not a world-record trapezohedral crystal.
Further interpretation of the results will also provide an understanding of how the rare pieces may have formed before they were slightly deformed while being washed down in ancient stream sediments. The ability of the HIPPO instrument to also show how far away a specimen is from being a single crystal helps with these interpretations.
The SCD instrument is a neutron single crystal diffractometer used to determine the periodic atomic arrangement or crystal structure of single crystals, both natural and synthetic. While one of the workhorse-instruments at the Lujan Center, HIPPO is a general-purpose powder diffractometer that measures both the crystal structure and orientation distribution of crystals (or texture) making up a poly-crystalline material from the powder pattern of the crystals. It is the only time-of-flight neutron instrument in the world that routinely measures texture, with single crystals being the ultimate textured samples.
“The gold single crystals are so far the largest single crystals characterized on HIPPO,” Vogel said. HIPPO handles a wide range of materials including rocks, battery materials, alloys, and nuclear fuel mock-ups.
History of Rakovan and the Lujan Center
The big-crystal question is not the first mystery to be solved using the Lujan Center tools: In 2006, Rakovan had been given a collection of several dozen gold crystals to study with X-ray diffraction. One crystal out of the batch was puzzling, showing a single crystal pattern in one orientation but a polycrystalline nature in all other orientations. He hypothesized that weathering and erosion had altered the exterior of the nugget, but that the overall single crystal morphology was intact. “To test this we needed to look at the interiors of the crystals but without cutting them in half,” Rakovan said.
Twelve years before, Rakovan had used the SCD instrument at the Lujan Center to characterize OH ordering in natural apatite crystals. “…Through that experience I learned about other potential applications of neutrons in studying materials. Thus, it dawned on me that neutron diffraction would be ideal to ‘see’ the crystallinity of the interior of these samples without having to destroy them,” he recounted.
While using the SCD instrument for this problem, Nakotte and Rakovan realized that the HIPPO instrument, allowing for texture measurements among other applications, would be able to provide additional data on the gold samples. Several samples were also measured on the HIPPO beamline and the larger probed volume on this instrument indeed provided valuable additional information.
In 2009, the journal Rocks & Minerals published the study, which demonstrated neutron diffraction is the best non-destructive method to establish gold crystallinity of samples that have been formed under the most extreme conditions. At that time, they examined a selection of museum and private collection pieces, discerning which ones were frauds.
While these unusual gold studies open new avenues for geologists, the work underscores a proven capability relevant to other fields, too. Researchers looking to understand the properties of single crystals that are several cubic centimeters in size may need to establish first whether their sample is indeed a single crystal using neutron diffraction. Additionally, researchers that require understanding of single crystal growth procedures or who need single crystals for a specific application, such as scintillators, can find the answers using Lujan Center instruments and expertise.
NNSA funds the production of neutrons at Los Alamos Neutron Science Center (LANSCE), and the U.S. Department of Energy’s Office of Science funded the Lujan Center user program.
SECRETARY HAGEL VISITS CHINESE AIRCRAFT CARRIER
FROM: U.S. DEFENSE DEPARTMENT
Hagel Visits Chinese Aircraft Carrier Liaoning
By Cheryl Pellerin
American Forces Press Service
QINGDAO, China, April 7, 2014 – On Defense Secretary Chuck Hagel’s first official visit to China, the Peoples’ Liberation Army allowed him, in response to a request made in January, to become the first foreign visitor to tour the sleek refitted Russian aircraft carrier -- the PLA’s first -- called Liaoning.
China is Hagel’s third stop after multiday meetings in Hawaii and Japan on his fourth trip to the Asia-Pacific region since becoming defense secretary. After a day of meetings here tomorrow, Hagel will stop in Mongolia to meet with government and military leaders there before starting home April 10.
Liaoning is moored at Yuchi Naval Base in its home port of Qingdao in east China’s Shandong province.
"The secretary was very pleased with his visit today aboard the carrier Liaoning,” Pentagon Press Secretary Navy Rear Adm. John Kirby said in a statement.
Hagel understood the significance of the PLA’s granting of his request for the tour, Kirby added, and the secretary was impressed by the professionalism of the ship’s officers and crew.
“He hopes today's visit is a harbinger of other opportunities to improve our military-to-military dialogue and transparency,” the press secretary said.
A defense official traveling with the secretary described the ship’s tour as lasting about two hours, beginning with a briefing about the ship, its capabilities and operating schedule conducted by the two-star strike carrier group commander and the ship’s commanding officer, Capt. Zhang Zheng.
The briefers were good, and they invited and encouraged questions, the official said. Hagel and his guest, U.S. Ambassador to China Max Baucus, and others on the tour all asked questions, the official added.
“The briefing lasted about 30 minutes, and then we saw medical facilities on the ship, some of the living quarters, the flight control station where they control flight operations, the pilot house, and the bridge, where they drive the ship,” the defense official said.
The secretary and his group also took a walking tour of the flight deck and saw launch stations and helicopter recovery stations as well arresting cables, “and got a briefing on how what we call in the U.S. Navy the ‘landing signals officers’ guide the aircraft in for an arrested landing on the flight deck,” the official explained.
He said the ship was extraordinarily clean, and the crew was sharp and informative.
”Every sailor at every station where Hagel [stopped] for the tour knew exactly what their job was, and how important their job was, and exactly how to explain it to the secretary,” the official said.
Hagel had a lot of give-and-take discussions with the crew throughout the tour, and talked to them just as he talks to U.S. troops when he goes out to visit them, the defense official added.
“The tour ended with a stop in the officers’ dining area, where Hagel had a chance to sit down with junior officers, have some refreshments and just talk to them,” the official said. “We all did. I sat down at a table with two junior female officers, and everybody did the same thing.”
The crew members were very impressive and very dedicated, he observed.
“It's a new capability they're trying to develop, and I think they all appreciate the importance of it to the PLA, but also the difficulty of it,” the official said. “On more than one occasion, the officers who were with us said quite frankly they know they have a long way to go in naval aviation. It is a difficult military capability to develop and to perfect, … and they expressed that they believe they can still learn much from us in terms of how to get better at it.”
The ship has three launching stations for jet aircraft, four arresting wires, a complement of about 1,500 sailors, one sixth of whom are officers, and there were 90 women in the crew, both officers and enlisted service members, the defense official said.
Liaoning has been out on sea trials almost 20 times, and officials know they still have to do more, he added.
Compared with U.S. aircraft carriers, Laioning isn’t as big or fast, and it doesn’t carry as many aircraft or as many types of aircraft, the official said, but it’s a real aircraft carrier, capable of launching and recovering jet combat aircraft.
“We asked them when they would have an operational naval air wing on the ship, and the captain said there's no timeline for that right now,” the official said. “They aren't at the state where they're declaring that sort of operational readiness.”
The defense official said the opportunity for Hagel and his group to tour the aircraft carrier today was a significant step in China’s attempts to be transparent and open.
“I would say that as this trip to Beijing begins for the secretary, today was a good first step in terms of trying to develop more openness and transparency,” the defense official said.
SEC COMMISSIONER PIWOWAR'S REMARKS AT ANNUAL INTERNATIONAL INSTITUTE FOR SECURITIES MARKET DEVELOPMENT
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SPEECH
Welcoming Remarks at the SEC 24th Annual International Institute for Securities Market Development
Commissioner Michael S. Piwowar
Washington, DC
April 7, 2014
Thank you, Paul [Leder], for that kind introduction, and I want to welcome you back to the Commission. Paul previously worked at the Commission for more than a decade from 1987 to 1999 and now has been with the Commission as Director of the Office of International Affairs for almost two months. I have enjoyed working with you and look forward to continuing to work with you in the international arena to promote investor protection, cross-border securities transactions, and fair, efficient and transparent markets. I also want to thank the Office of International Affairs staff who worked so hard to organize this two-week training initiative and all of the speakers, moderators, and panelists who have generously invested much time and effort in making this program so worthwhile.
I am excited to be here with you this morning to welcome you to Washington, DC and to the SEC’s 24th Annual International Institute for Securities Market Development. In my previous tour at the Commission as an economist in what is now the Division of Economic and Risk Analysis (DERA), I had the privilege of participating in this program. I, therefore, know from firsthand experience the importance and usefulness of this global training program. In fact, this program is an integral part of the Commission’s longstanding commitment to promote the adoption of high quality regulatory standards worldwide.
Before I continue, I need to provide the standard disclaimer that my remarks are my own and that they do not necessarily reflect the views of the Commission or my fellow Commissioners. As you participate in this great program over the next two weeks, I hope you keep a couple of things in mind.
First, the benefits from this program are not a one-way street. This program provides the Commission with the opportunity to build relationships with regulators from around the world that help us in our work to protect our markets and investors. We often require assistance from regulatory authorities abroad for cross-border enforcement and oversight efforts. Many of our investigation and enforcement efforts require banking, brokerage or telephone records, testimony, and other evidence from jurisdictions outside the United States. The contacts we have forged through this program over the past several years have considerably advanced our investigations and examinations, including arrangements for freezing fraud proceeds. I also hope that the program provides you with the ability to build relationships with other participants as well as with us that will help in your enforcement and oversight efforts.
Second, when it comes to securities markets regulation, one size does not fit all. The program has been carefully designed to include sessions that use terms like “best practices” and “key concepts,” as well as workshops featuring case studies and panel discussions with regulators from multiple jurisdictions. I hope that none of you leave the conference with the notion that your markets should have the same regulations as us or as each other. Rather, each of you should take the lessons that you find valuable from this program and use them to tailor your regulations to the particular characteristics and circumstances present in your own securities markets.
I would also like to take this opportunity to briefly elaborate on the effects of regulation on securities market development and the importance that these markets have on economic growth. The participants in the securities markets, of course, include the issuers of securities, the investors that buy and sell those securities, and the institutions – brokers, dealers, exchanges, alternative trading venues, clearing agencies, etc. – that help facilitate transactions in those securities.
Many of our regulatory efforts are viewed through the lens of investor protection. It is through this lens that we evaluate the duties of securities issuers to disclose meaningful information to potential investors so that they can make informed investment decisions, and the duties of market participants to treat investors fairly when transacting in securities. Through the investor protection lens, we also determine the appropriate risk-based methods to monitor compliance with those duties and to enforce them.
But, the Commission’s core mission goes beyond protecting investors and maintaining fair, orderly, and efficient markets. The third part of our statutory mission is to promote capital formation. I hope that, even if your regulatory mandate does not explicitly include promoting capital formation, you always seek to balance the needs of businesses with the needs of investors.
As U.S. Senator Mike Crapo (R-ID), Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, which is the authorizing committee of the Commission and the other financial regulators, likes to say “Capital is the lifeblood of…businesses, which in turn are the engines of job creation and economic growth.”[1] Conversely, regulation that is overly burdensome or restrictive will inhibit capital formation and economic growth.
I want to focus the remainder of my remarks on capital markets. By capital markets, I mean the stock and bond markets. While capital markets are only a component of the overall securities markets, they are, in fact, the lifeblood of businesses, which are the drivers of economic growth.
Effective Regulation Promotes Capital Market Development
An overarching theme of this program is that a jurisdiction’s institutional and regulatory policy framework can strongly influence capital market development. The notion that there is a close relationship between financial regulation and capital markets is not new. The specialized field of economics known as “law and finance” has established, for example, that countries with better investor protections, measured by both the character of legal rules and the quality of enforcement, tend to have larger and deeper capital markets.[2] The academic law and finance literature has produced many other findings with key policy implications. While I do not have time today to properly review all of the findings in this area, I do want to mention one important paper released last month entitled Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges, which, among other things, looks at a particular interaction involving a country’s financial regulatory system and its tax system, and the resulting effects on capital market development.[3]
In that paper, two German finance professors, Christoph Kaserer and Marc Steffen Rapp, find that the regulatory and tax systems governing retirement savings in an economy play an important role in capital market development.[4] The professors posit that more favorable tax and regulatory frameworks for retirement savings cause domestic stock markets to be larger and are likely to exert a positive influence on capital market depth. They estimate that increasing the size of pension funds by 10 percentage points of gross domestic product (GDP) would lead to an increase in stock market size of 7 percentage points of GDP. Kaserer and Rapp recommend that retirement savings rules and tax laws be designed in a way that encourages a larger part of national savings to be invested through the capital markets.
Capital Market Development Promotes Economic Growth
Capital markets are a significant source of financing for the corporate sector and play an integral role in economic growth. Equity markets, in particular, are of prime importance for economic development. More liquid stock markets – where it is less expensive to trade equities – reduce the disincentives to investing in long-duration projects because investors can easily sell their ownership interest in the project if they need their savings before the project matures. Therefore, enhanced liquidity facilitates investment in longer-run, higher-return projects that boost productivity growth.[5]
Due to the limited availability of debt-based financing for high-risk projects, access to equity financing also may spur innovation.[6] Moreover, the fact that shareholders are residual claimants means they have a much stronger incentive to exert control over the investment decisions of a company than debt holders. Active investors, including institutional investors, may use their expertise to push for changes that could lead to enhanced performance and stock price growth.
It is also important to note that stocks, unlike debt in many cases, are information sensitive, which leads to more information gathering incentives by outside investors than debt financing does.[7] Kaserer and Rapp argue that the availability of funds for long-term risky investments combined with the incentives for improving corporate governance would result in an estimated one-to-one relationship between stock market growth and the long-term real growth rate in GDP, i.e., stock market growth of one-third would increase real economic growth by one-third.[8] Overall, they estimate that growing capital markets by one-third would increase the long-term real growth rate in per capita GDP by about 20%.[9]
Importantly, the Kaserer and Rapp study shows that the balance between capital market finance and bank lending matters. An overreliance on banks comes at a cost in terms of reduced economic growth. The study also documents that capital markets are good for research and development (R&D). European firms’ R&D intensity is positively correlated with the level of equity financing. In contrast, firms in bank-based economies have less flexibility in their financing decisions and therefore follow a more conservative financing strategy, which might lead to underinvestment in R&D.
A Virtuous Circle
To sum up, effective regulation leads to capital market development. Capital market development, in turn, leads to economic growth. Economic growth improves standards of living of people in your jurisdictions in a number of ways, including reducing poverty and promoting savings, investment, innovation and job creation.
But, it doesn’t stop there. Growing your capital markets not only benefits your own economy, but it also benefits markets and economies globally. Better developed capital markets and more dynamic economies provide consumers with the ability to purchase more products and services from around the world and investors with the ability to invest globally, which provides businesses access to additional sources of capital. A rising tide lifts all boats.
If we all adopt high quality regulatory standards in our own jurisdictions and work together to promote high quality standards worldwide, we can create what economists call a “virtuous circle” – a positive chain of events that reinforces itself through a feedback loop – in which everyone benefits. This two-week program represents an important step in establishing such a virtuous circle to improve standards of living worldwide.
Thank you for your attention. Enjoy the program.
[1] See, e.g., News Release: Ranking Member Crapo's Statement at FSOC Annual Report Hearing (May 21, 2013), available at http://www.crapo.senate.gov/media/newsreleases/release_full.cfm?id=342841.
[2] See, e.g., Rafael La Porta et al., Legal Determinants of External Finance (July 1997), available at http://scholar.harvard.edu/shleifer/files/legaldeterminants.pdf and Rafael La Porta et al., Law and Finance (Dec. 1998), available at http://www.jstor.org/stable/pdfplus/10.1086/250042.pdf?acceptTC=true&jpdConfirm=true.
[3] I thank former SEC Commissioner Kathleen Casey for bringing this paper to my attention.
[4] Christoph Kaserer & Marc Steffen Rapp, Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges (Mar. 2014), available at http://www.aima.org/en/education/research-into-capital-markets-and-economic-growth.cfm.
[5] See Ross Levine and Sara Zervos, Stock Markets, Banks, and Economic Growth (June 1998), available at http://www.isid.ac.in/~tridip/Teaching/DevEco/Readings/07Finance/06Levine%26Zervos-AER1998.pdf.
[6] See Po-Hsuan Hsu et al., Financial development and innovation: Cross-country evidence (Feb. 2013), available at http://ac.els-cdn.com/S0304405X13003024/1-s2.0-S0304405X13003024-main.pdf?_tid=b0301ee2-be61-11e3-a531-00000aacb35d&acdnat=1396881432_07b3612fbfae3e71a910a56125ccfd26.
[7] See Christoph Kaserer and Marc Steffen Rapp, Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges (Mar. 2014) .
[8] Id.
[9] Id.
SPEECH
Welcoming Remarks at the SEC 24th Annual International Institute for Securities Market Development
Commissioner Michael S. Piwowar
Washington, DC
April 7, 2014
Thank you, Paul [Leder], for that kind introduction, and I want to welcome you back to the Commission. Paul previously worked at the Commission for more than a decade from 1987 to 1999 and now has been with the Commission as Director of the Office of International Affairs for almost two months. I have enjoyed working with you and look forward to continuing to work with you in the international arena to promote investor protection, cross-border securities transactions, and fair, efficient and transparent markets. I also want to thank the Office of International Affairs staff who worked so hard to organize this two-week training initiative and all of the speakers, moderators, and panelists who have generously invested much time and effort in making this program so worthwhile.
I am excited to be here with you this morning to welcome you to Washington, DC and to the SEC’s 24th Annual International Institute for Securities Market Development. In my previous tour at the Commission as an economist in what is now the Division of Economic and Risk Analysis (DERA), I had the privilege of participating in this program. I, therefore, know from firsthand experience the importance and usefulness of this global training program. In fact, this program is an integral part of the Commission’s longstanding commitment to promote the adoption of high quality regulatory standards worldwide.
Before I continue, I need to provide the standard disclaimer that my remarks are my own and that they do not necessarily reflect the views of the Commission or my fellow Commissioners. As you participate in this great program over the next two weeks, I hope you keep a couple of things in mind.
First, the benefits from this program are not a one-way street. This program provides the Commission with the opportunity to build relationships with regulators from around the world that help us in our work to protect our markets and investors. We often require assistance from regulatory authorities abroad for cross-border enforcement and oversight efforts. Many of our investigation and enforcement efforts require banking, brokerage or telephone records, testimony, and other evidence from jurisdictions outside the United States. The contacts we have forged through this program over the past several years have considerably advanced our investigations and examinations, including arrangements for freezing fraud proceeds. I also hope that the program provides you with the ability to build relationships with other participants as well as with us that will help in your enforcement and oversight efforts.
Second, when it comes to securities markets regulation, one size does not fit all. The program has been carefully designed to include sessions that use terms like “best practices” and “key concepts,” as well as workshops featuring case studies and panel discussions with regulators from multiple jurisdictions. I hope that none of you leave the conference with the notion that your markets should have the same regulations as us or as each other. Rather, each of you should take the lessons that you find valuable from this program and use them to tailor your regulations to the particular characteristics and circumstances present in your own securities markets.
I would also like to take this opportunity to briefly elaborate on the effects of regulation on securities market development and the importance that these markets have on economic growth. The participants in the securities markets, of course, include the issuers of securities, the investors that buy and sell those securities, and the institutions – brokers, dealers, exchanges, alternative trading venues, clearing agencies, etc. – that help facilitate transactions in those securities.
Many of our regulatory efforts are viewed through the lens of investor protection. It is through this lens that we evaluate the duties of securities issuers to disclose meaningful information to potential investors so that they can make informed investment decisions, and the duties of market participants to treat investors fairly when transacting in securities. Through the investor protection lens, we also determine the appropriate risk-based methods to monitor compliance with those duties and to enforce them.
But, the Commission’s core mission goes beyond protecting investors and maintaining fair, orderly, and efficient markets. The third part of our statutory mission is to promote capital formation. I hope that, even if your regulatory mandate does not explicitly include promoting capital formation, you always seek to balance the needs of businesses with the needs of investors.
As U.S. Senator Mike Crapo (R-ID), Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, which is the authorizing committee of the Commission and the other financial regulators, likes to say “Capital is the lifeblood of…businesses, which in turn are the engines of job creation and economic growth.”[1] Conversely, regulation that is overly burdensome or restrictive will inhibit capital formation and economic growth.
I want to focus the remainder of my remarks on capital markets. By capital markets, I mean the stock and bond markets. While capital markets are only a component of the overall securities markets, they are, in fact, the lifeblood of businesses, which are the drivers of economic growth.
Effective Regulation Promotes Capital Market Development
An overarching theme of this program is that a jurisdiction’s institutional and regulatory policy framework can strongly influence capital market development. The notion that there is a close relationship between financial regulation and capital markets is not new. The specialized field of economics known as “law and finance” has established, for example, that countries with better investor protections, measured by both the character of legal rules and the quality of enforcement, tend to have larger and deeper capital markets.[2] The academic law and finance literature has produced many other findings with key policy implications. While I do not have time today to properly review all of the findings in this area, I do want to mention one important paper released last month entitled Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges, which, among other things, looks at a particular interaction involving a country’s financial regulatory system and its tax system, and the resulting effects on capital market development.[3]
In that paper, two German finance professors, Christoph Kaserer and Marc Steffen Rapp, find that the regulatory and tax systems governing retirement savings in an economy play an important role in capital market development.[4] The professors posit that more favorable tax and regulatory frameworks for retirement savings cause domestic stock markets to be larger and are likely to exert a positive influence on capital market depth. They estimate that increasing the size of pension funds by 10 percentage points of gross domestic product (GDP) would lead to an increase in stock market size of 7 percentage points of GDP. Kaserer and Rapp recommend that retirement savings rules and tax laws be designed in a way that encourages a larger part of national savings to be invested through the capital markets.
Capital Market Development Promotes Economic Growth
Capital markets are a significant source of financing for the corporate sector and play an integral role in economic growth. Equity markets, in particular, are of prime importance for economic development. More liquid stock markets – where it is less expensive to trade equities – reduce the disincentives to investing in long-duration projects because investors can easily sell their ownership interest in the project if they need their savings before the project matures. Therefore, enhanced liquidity facilitates investment in longer-run, higher-return projects that boost productivity growth.[5]
Due to the limited availability of debt-based financing for high-risk projects, access to equity financing also may spur innovation.[6] Moreover, the fact that shareholders are residual claimants means they have a much stronger incentive to exert control over the investment decisions of a company than debt holders. Active investors, including institutional investors, may use their expertise to push for changes that could lead to enhanced performance and stock price growth.
It is also important to note that stocks, unlike debt in many cases, are information sensitive, which leads to more information gathering incentives by outside investors than debt financing does.[7] Kaserer and Rapp argue that the availability of funds for long-term risky investments combined with the incentives for improving corporate governance would result in an estimated one-to-one relationship between stock market growth and the long-term real growth rate in GDP, i.e., stock market growth of one-third would increase real economic growth by one-third.[8] Overall, they estimate that growing capital markets by one-third would increase the long-term real growth rate in per capita GDP by about 20%.[9]
Importantly, the Kaserer and Rapp study shows that the balance between capital market finance and bank lending matters. An overreliance on banks comes at a cost in terms of reduced economic growth. The study also documents that capital markets are good for research and development (R&D). European firms’ R&D intensity is positively correlated with the level of equity financing. In contrast, firms in bank-based economies have less flexibility in their financing decisions and therefore follow a more conservative financing strategy, which might lead to underinvestment in R&D.
A Virtuous Circle
To sum up, effective regulation leads to capital market development. Capital market development, in turn, leads to economic growth. Economic growth improves standards of living of people in your jurisdictions in a number of ways, including reducing poverty and promoting savings, investment, innovation and job creation.
But, it doesn’t stop there. Growing your capital markets not only benefits your own economy, but it also benefits markets and economies globally. Better developed capital markets and more dynamic economies provide consumers with the ability to purchase more products and services from around the world and investors with the ability to invest globally, which provides businesses access to additional sources of capital. A rising tide lifts all boats.
If we all adopt high quality regulatory standards in our own jurisdictions and work together to promote high quality standards worldwide, we can create what economists call a “virtuous circle” – a positive chain of events that reinforces itself through a feedback loop – in which everyone benefits. This two-week program represents an important step in establishing such a virtuous circle to improve standards of living worldwide.
Thank you for your attention. Enjoy the program.
[1] See, e.g., News Release: Ranking Member Crapo's Statement at FSOC Annual Report Hearing (May 21, 2013), available at http://www.crapo.senate.gov/media/newsreleases/release_full.cfm?id=342841.
[2] See, e.g., Rafael La Porta et al., Legal Determinants of External Finance (July 1997), available at http://scholar.harvard.edu/shleifer/files/legaldeterminants.pdf and Rafael La Porta et al., Law and Finance (Dec. 1998), available at http://www.jstor.org/stable/pdfplus/10.1086/250042.pdf?acceptTC=true&jpdConfirm=true.
[3] I thank former SEC Commissioner Kathleen Casey for bringing this paper to my attention.
[4] Christoph Kaserer & Marc Steffen Rapp, Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges (Mar. 2014), available at http://www.aima.org/en/education/research-into-capital-markets-and-economic-growth.cfm.
[5] See Ross Levine and Sara Zervos, Stock Markets, Banks, and Economic Growth (June 1998), available at http://www.isid.ac.in/~tridip/Teaching/DevEco/Readings/07Finance/06Levine%26Zervos-AER1998.pdf.
[6] See Po-Hsuan Hsu et al., Financial development and innovation: Cross-country evidence (Feb. 2013), available at http://ac.els-cdn.com/S0304405X13003024/1-s2.0-S0304405X13003024-main.pdf?_tid=b0301ee2-be61-11e3-a531-00000aacb35d&acdnat=1396881432_07b3612fbfae3e71a910a56125ccfd26.
[7] See Christoph Kaserer and Marc Steffen Rapp, Capital Markets and Economic Growth: Long-Term Trends and Policy Challenges (Mar. 2014) .
[8] Id.
[9] Id.
"JERK.COM" OPERATORS CHARGED BY FTC WITH DECEIVING CONSUMERS, HAVESTING PERSONONAL INFORMATION
FROM: FEDERAL TRADE COMMISSION
FTC Charges Operators of “Jerk.com” Website With Deceiving Consumers
Company Took Information from Facebook to Label Millions a “Jerk” or “Not a Jerk”
The Federal Trade Commission charged the operators of the website “Jerk.com” with harvesting personal information from Facebook to create profiles labeling people a “Jerk” or “not a Jerk,” then falsely claiming that consumers could revise their online profiles by paying $30. According to the FTC’s complaint, between 2009 and 2013 the defendants, Jerk, LLC and the operator of the website, John Fanning, created Jerk.com profiles for more than 73 million people, including children.
In its complaint, the FTC charges that the defendants violated the FTC Act by misleading consumers that the content on Jerk.com had been created by other Jerk.com users, when in fact most of it had been harvested from Facebook; and by falsely leading consumers to believe that by paying for a Jerk.com membership, they could access “premium” features that could allow them to change their “Jerk” profile.
The FTC is seeking an order barring the defendants’ deceptive practices, prohibiting them from using the personal information they improperly obtained, and requiring them to delete the information.
“In today’s interconnected world, people are especially concerned about their reputation online, and this deceptive scheme was a brazen attempt to exploit those concerns,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.
According to the FTC’s complaint, Jerk.com profiles often appeared in search engine results when consumers searched for an individual’s name. Upon viewing their photos on Jerk.com, many believed that someone they knew had created their Jerk.com profile. Jerk reinforced this view by representing that users created all the content on Jerk.
But in reality, the defendants created the vast majority of the profiles by misusing personal information they improperly obtained through Facebook, the FTC alleged. They registered numerous websites with Facebook and then allegedly used Facebook’s application programming interfaces to download the names and photos of millions of Facebook users, which they in turn used to create nearly all the Jerk.com profiles.
In addition to buttons that allowed users to vote on whether a person was a “Jerk” or not, Jerk profiles included fields in which users could enter personal information about the subject or post comments about them. In some cases, the complaint alleges, the profile comment fields subjected people to derisive and abusive comments, such as, “Omg I hate this kid he\’s such a loser,” and, “Nobody in their right mind would love you … not even your parents love [you].”
The profiles also included millions of photos, including photos of children and photos that consumers claim they had designated on Facebook as private, the FTC complaint alleges. Some of them featured intimate family moments, including children bathing and a mother nursing her child.
The defendants also told consumers they could “use Jerk to manage your reputation and resolve disputes with people who you are in conflict with,” according to the FTC’s complaint. They allegedly charged consumers $25 to email Jerk.com’s customer service department, and also falsely told consumers that if they paid $30 for a website subscription, they could access “premium features,” including the ability to dispute information posted on Jerk.com, and receive fast notifications and special updates. But according to the FTC, in many cases, consumers who paid the customer service or subscription fee often got nothing in return.
The Commission vote to issue the administrative complaint was 4-0. The evidentiary hearing is scheduled to begin before an administrative law judge at the FTC on January 27, 2015.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.
FTC Charges Operators of “Jerk.com” Website With Deceiving Consumers
Company Took Information from Facebook to Label Millions a “Jerk” or “Not a Jerk”
The Federal Trade Commission charged the operators of the website “Jerk.com” with harvesting personal information from Facebook to create profiles labeling people a “Jerk” or “not a Jerk,” then falsely claiming that consumers could revise their online profiles by paying $30. According to the FTC’s complaint, between 2009 and 2013 the defendants, Jerk, LLC and the operator of the website, John Fanning, created Jerk.com profiles for more than 73 million people, including children.
In its complaint, the FTC charges that the defendants violated the FTC Act by misleading consumers that the content on Jerk.com had been created by other Jerk.com users, when in fact most of it had been harvested from Facebook; and by falsely leading consumers to believe that by paying for a Jerk.com membership, they could access “premium” features that could allow them to change their “Jerk” profile.
The FTC is seeking an order barring the defendants’ deceptive practices, prohibiting them from using the personal information they improperly obtained, and requiring them to delete the information.
“In today’s interconnected world, people are especially concerned about their reputation online, and this deceptive scheme was a brazen attempt to exploit those concerns,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.
According to the FTC’s complaint, Jerk.com profiles often appeared in search engine results when consumers searched for an individual’s name. Upon viewing their photos on Jerk.com, many believed that someone they knew had created their Jerk.com profile. Jerk reinforced this view by representing that users created all the content on Jerk.
But in reality, the defendants created the vast majority of the profiles by misusing personal information they improperly obtained through Facebook, the FTC alleged. They registered numerous websites with Facebook and then allegedly used Facebook’s application programming interfaces to download the names and photos of millions of Facebook users, which they in turn used to create nearly all the Jerk.com profiles.
In addition to buttons that allowed users to vote on whether a person was a “Jerk” or not, Jerk profiles included fields in which users could enter personal information about the subject or post comments about them. In some cases, the complaint alleges, the profile comment fields subjected people to derisive and abusive comments, such as, “Omg I hate this kid he\’s such a loser,” and, “Nobody in their right mind would love you … not even your parents love [you].”
The profiles also included millions of photos, including photos of children and photos that consumers claim they had designated on Facebook as private, the FTC complaint alleges. Some of them featured intimate family moments, including children bathing and a mother nursing her child.
The defendants also told consumers they could “use Jerk to manage your reputation and resolve disputes with people who you are in conflict with,” according to the FTC’s complaint. They allegedly charged consumers $25 to email Jerk.com’s customer service department, and also falsely told consumers that if they paid $30 for a website subscription, they could access “premium features,” including the ability to dispute information posted on Jerk.com, and receive fast notifications and special updates. But according to the FTC, in many cases, consumers who paid the customer service or subscription fee often got nothing in return.
The Commission vote to issue the administrative complaint was 4-0. The evidentiary hearing is scheduled to begin before an administrative law judge at the FTC on January 27, 2015.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.
Monday, April 7, 2014
SEC'S FIRST WHISTLEBLOWER UNDER NEW PROGRAM TO RECEIVE ADDITIONAL $150,000 PAYOUT
FROM: SECURITIES AND EXCHANGE COMMISSION
4/04/2014 12:51 PM EDT
The Securities and Exchange Commission today announced that the whistleblower who received the first award under the agency’s new whistleblower program will receive an additional $150,000 payout after the SEC collected additional funds in the case.
The whistleblower, who the SEC did not identify in order to protect confidentiality, has now been awarded a total of nearly $200,000 since the award was announced on Aug. 21, 2012. The award recipient helped the SEC stop a multi-million dollar fraud by providing documents and other significant information that allowed its investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims.
The award represents 30 percent of the amount collected in the SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed under the law. The additional payout comes after the SEC collected an additional $500,000 from one of the defendants in the case.
“This latest payment shows that the SEC’s aggressive collection efforts pay dividends not only for harmed investors but also for whistleblowers,” said Sean McKessy, chief of the SEC’s Whistleblower Office. “As we collect additional funds from securities law violators, we can increase the payouts to whistleblowers.”
The SEC expects to collect additional money from defendants in this case as some are making payments under a periodic payment schedule ordered by the court.
The 2010 Dodd-Frank Act authorized the whistleblower program to reward individuals who offer high-quality original information that leads to an SEC enforcement action in which more than $1 million in sanctions is ordered. Awards can range from 10 percent to 30 percent of the money collected. The Dodd-Frank Act included enhanced anti-retaliation employment protections for whistleblowers and provisions to protect their identity. The law specifies that the SEC cannot disclose any information, including information the whistleblower provided to the SEC, which could reasonably be expected to directly or indirectly reveal a whistleblower’s identity.
4/04/2014 12:51 PM EDT
The Securities and Exchange Commission today announced that the whistleblower who received the first award under the agency’s new whistleblower program will receive an additional $150,000 payout after the SEC collected additional funds in the case.
The whistleblower, who the SEC did not identify in order to protect confidentiality, has now been awarded a total of nearly $200,000 since the award was announced on Aug. 21, 2012. The award recipient helped the SEC stop a multi-million dollar fraud by providing documents and other significant information that allowed its investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims.
The award represents 30 percent of the amount collected in the SEC enforcement action against the perpetrators of the scheme, the maximum percentage payout allowed under the law. The additional payout comes after the SEC collected an additional $500,000 from one of the defendants in the case.
“This latest payment shows that the SEC’s aggressive collection efforts pay dividends not only for harmed investors but also for whistleblowers,” said Sean McKessy, chief of the SEC’s Whistleblower Office. “As we collect additional funds from securities law violators, we can increase the payouts to whistleblowers.”
The SEC expects to collect additional money from defendants in this case as some are making payments under a periodic payment schedule ordered by the court.
The 2010 Dodd-Frank Act authorized the whistleblower program to reward individuals who offer high-quality original information that leads to an SEC enforcement action in which more than $1 million in sanctions is ordered. Awards can range from 10 percent to 30 percent of the money collected. The Dodd-Frank Act included enhanced anti-retaliation employment protections for whistleblowers and provisions to protect their identity. The law specifies that the SEC cannot disclose any information, including information the whistleblower provided to the SEC, which could reasonably be expected to directly or indirectly reveal a whistleblower’s identity.
PRESIDENT OBAMA APPLAUDS $10.10 AN HOUR MINIMUM WAGE IN MARYLAND
FROM: THE WHITE HOUSE
Statement by the President
The Maryland Legislature did the right thing for its workers today by increasing the state minimum wage to $10.10 an hour. Maryland’s important action is a reminder that many states, cities and counties – as well as a majority of the American people – are way ahead of Washington on this crucial issue. I applaud Governor O’Malley and the state legislature for leading by example and giving more Maryland workers the raise they deserve. But there’s only one group who can get the job done for the entire country – that’s Congress. They should follow Maryland’s lead and lift wages for 28 million Americans by passing legislation to increase the federal minimum wage to $10.10, helping to ensure that no American who works full time has to raise a family in poverty, and that every American who works hard has the opportunity to succeed.
U.S. DEFENSE DEPARTMENT CONTRACTS FOR APRIL 7, 2014
FROM: U.S. DEFENSE DEPARTMENT U.S.
CONTRACTS
NAVY
Thales Defense & Security Inc., Clarksburg, Md., is being awarded a $38,527,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for Optimized Top Owl (OTO) Helmet Mounted Sight and Display (HMSD) Sustainment Capability services for the H-1 Aircraft program. This contract includes the facility, labor, materials, parts, test and tooling equipment required for the OTO repair capabilities transition plan from Bordeaux, France to the United States. In addition, this contract includes all maintenance, support activities, repairs, calibrations and technical data required to return the OTO HMSD associated items to a ready for issue condition. Work will be performed in Clarksburg, Md., and is expected to be completed in April 2019. Fiscal 2014 Navy working capital funds in the amount of $1,846,908 are being obligated on this award, none of which will expire at the end of the current fiscal year. This contract was not competitively procured pursuant to FAR 6.302-1. The Naval Air Warfare Center Aircraft Division, Lakehurst, N.J., is the contracting activity (N68335-14-D-0014).
Raytheon Missile Systems, Tucson, Ariz., is being awarded a $9,595,524 modification to a previously awarded indefinite-delivery/indefinite-quantity contract (N00019-11-D-0004) to provide AIM-9X Sidewinder mission support and sustainment activities for the U.S. Air Force, the U.S. Navy, and the governments of Singapore, Australia, Denmark, Finland, Turkey, South Korea, Switzerland, Saudi Arabia, and Poland under the Foreign Military Sales Program. Work will be performed in Tucson, Ariz., and is expected to be completed in April 2015. Funds are not being obligated at time of award. Funds will be obligated on individual delivery orders as they are issued. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
DEFENSE LOGISTICS AGENCY
Wolverine World Wide Inc., Rockford, Mich., has been awarded a maximum $14,955,649 modification (P00102) exercising the third option period on a one-year base contract (SPM1C1-11-D-1045) with four one-year option periods for men’s and women’s safety boots. This is a firm-fixed-price contract. Location of performance is Michigan with an April 7, 2015 performance completion date. Using military service is Navy. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
MISSILE DEFENSE AGENCY
Lockheed Martin Mission Systems and Training, Moorestown, N.J., has been awarded a $13,684,749 modification (number P00138) to contract HQ0276-10-C-0001 for support of advanced concepts initiatives by the Aegis Ballistic Missile Defense Program Office to identify technology for introduction into present and future Aegis Ballistic Missile Defense Baselines/Spirals. This modification brings the total cumulative face value of the contract to $1,788,932,405 from $1,775,247,656. Work will be performed at Moorestown, N.J., with an expected completion date of June 30, 2014. Fiscal 2014 research, development, test and evaluation funds in the amount of $13,684,749 are being obligated at time of award. The Missile Defense Agency, Dahlgren, Va., is the contracting activity.
ARMY
Lockheed Martin, Liverpool, N.Y., was awarded a $9,085,206 modification (P00092) to contract W15P7T-06-C-T004 for interim contractor services required to continue support of the AN/TPQ-53 radar fleet. Fiscal 2012 other procurement, Army funds in the amount of $9,085,206 were obligated at the time of the award. Estimated completion date is Sept. 30, 2014. Work will be performed in Liverpool, N.Y. Army Contracting Command, Aberdeen, Md., is the contracting activity.
Schwartz Excavating Inc.,*Countryside, Ill., was awarded a $7,236,001 firm-fixed-price contract for construction services for the Chicagoland Underflow Plan, McCook Reservoir Stage 2 Slope Stabilization Project, greater Chicago, Illinois. The project includes soil nail walls, fill placement, excavation, grading, and the cellular confinement system for the current reservoir expansion. Fiscal 2014 operations and maintenance, Army funds in the amount of $7,236,001 were obligated at the time of the award. Estimated completion date is Dec. 30, 2014. Bids were solicited via the Internet with six received. Work will be performed in Bedford Park, Ill. U.S. Army Corps of Engineers, Buffalo, N.Y., is the contracting activity (W912P4-14-C-0003).
*Small Business
CONTRACTS
NAVY
Thales Defense & Security Inc., Clarksburg, Md., is being awarded a $38,527,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for Optimized Top Owl (OTO) Helmet Mounted Sight and Display (HMSD) Sustainment Capability services for the H-1 Aircraft program. This contract includes the facility, labor, materials, parts, test and tooling equipment required for the OTO repair capabilities transition plan from Bordeaux, France to the United States. In addition, this contract includes all maintenance, support activities, repairs, calibrations and technical data required to return the OTO HMSD associated items to a ready for issue condition. Work will be performed in Clarksburg, Md., and is expected to be completed in April 2019. Fiscal 2014 Navy working capital funds in the amount of $1,846,908 are being obligated on this award, none of which will expire at the end of the current fiscal year. This contract was not competitively procured pursuant to FAR 6.302-1. The Naval Air Warfare Center Aircraft Division, Lakehurst, N.J., is the contracting activity (N68335-14-D-0014).
Raytheon Missile Systems, Tucson, Ariz., is being awarded a $9,595,524 modification to a previously awarded indefinite-delivery/indefinite-quantity contract (N00019-11-D-0004) to provide AIM-9X Sidewinder mission support and sustainment activities for the U.S. Air Force, the U.S. Navy, and the governments of Singapore, Australia, Denmark, Finland, Turkey, South Korea, Switzerland, Saudi Arabia, and Poland under the Foreign Military Sales Program. Work will be performed in Tucson, Ariz., and is expected to be completed in April 2015. Funds are not being obligated at time of award. Funds will be obligated on individual delivery orders as they are issued. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
DEFENSE LOGISTICS AGENCY
Wolverine World Wide Inc., Rockford, Mich., has been awarded a maximum $14,955,649 modification (P00102) exercising the third option period on a one-year base contract (SPM1C1-11-D-1045) with four one-year option periods for men’s and women’s safety boots. This is a firm-fixed-price contract. Location of performance is Michigan with an April 7, 2015 performance completion date. Using military service is Navy. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.
MISSILE DEFENSE AGENCY
Lockheed Martin Mission Systems and Training, Moorestown, N.J., has been awarded a $13,684,749 modification (number P00138) to contract HQ0276-10-C-0001 for support of advanced concepts initiatives by the Aegis Ballistic Missile Defense Program Office to identify technology for introduction into present and future Aegis Ballistic Missile Defense Baselines/Spirals. This modification brings the total cumulative face value of the contract to $1,788,932,405 from $1,775,247,656. Work will be performed at Moorestown, N.J., with an expected completion date of June 30, 2014. Fiscal 2014 research, development, test and evaluation funds in the amount of $13,684,749 are being obligated at time of award. The Missile Defense Agency, Dahlgren, Va., is the contracting activity.
ARMY
Lockheed Martin, Liverpool, N.Y., was awarded a $9,085,206 modification (P00092) to contract W15P7T-06-C-T004 for interim contractor services required to continue support of the AN/TPQ-53 radar fleet. Fiscal 2012 other procurement, Army funds in the amount of $9,085,206 were obligated at the time of the award. Estimated completion date is Sept. 30, 2014. Work will be performed in Liverpool, N.Y. Army Contracting Command, Aberdeen, Md., is the contracting activity.
Schwartz Excavating Inc.,*Countryside, Ill., was awarded a $7,236,001 firm-fixed-price contract for construction services for the Chicagoland Underflow Plan, McCook Reservoir Stage 2 Slope Stabilization Project, greater Chicago, Illinois. The project includes soil nail walls, fill placement, excavation, grading, and the cellular confinement system for the current reservoir expansion. Fiscal 2014 operations and maintenance, Army funds in the amount of $7,236,001 were obligated at the time of the award. Estimated completion date is Dec. 30, 2014. Bids were solicited via the Internet with six received. Work will be performed in Bedford Park, Ill. U.S. Army Corps of Engineers, Buffalo, N.Y., is the contracting activity (W912P4-14-C-0003).
*Small Business
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