This is your Jan. 19, 2012 edition of the Texas State Securities Board Bulletin, a biweekly roundup of regulatory news and investor education tips. The Web version of this Bulletin and past issues are available at http://www.ssb.state.tx.us/News/index.php.

The State Securities Board registers securities offered or sold in Texas; oversees the firms and individuals selling securities or providing investment advice; enforces the Securities Act through criminal, civil and administrative actions; and provides investor education presentations and material. For more information, please contact Robert Elder, Communications, at 512-305-8386 or relder@ssb.state.tx.us.

Alan Nelson and Mary Alice Monteza of San Antonio created Castro International to lure investors into the supposedly remunerative world of overseas investing. The pair told potential investors they had wealthy clients who wanted to put their money into foreign high-yield investments, and took in about $850,000 from investors. But they apparently made no investments for their clients. Nelson and Monteza pleaded no contest to first-degree aggravated theft on Jan. 9 in Bexar County state District Court, with prosecutors agreeing to recommend that each defendant be sentenced to 18 years in state prison. Prosecutors, however, agreed to recommend community supervision if Nelson and Monteza pay $850,000 in restitution before the sentencing hearing in April. The State Securities Board assisted in the investigation of Nelson and Monteza.

This wasn't the pair's first foray into bogus overseas investments. In 2007, the Securities Commissioner entered a Cease and Desist Order against Nelson and Monteza for engaging in fraud and selling securities without being registered to do so. The pair sold investments through a company called Avalon World Trade Ltd., telling investors they would reap a high rate of return with no risk.

A toll-free hotline and website have been established to assist investors who purchased auction rate securities (ARS) through E*TRADE Securities LLC. State securities regulators and E*TRADE reached a settlement in October 2011 calling for the return of approximately $100 million to the firm's clients who have had their funds frozen in the ARS market since 2008. The firm also will pay a $5 million fine. As part of the settlement, E*TRADE agreed to maintain a dedicated toll-free telephone assistance line, website and email address to provide information about the terms of the final order and to answer questions from investors. The toll-free hotline can be reached at 1-888-296-0880, Monday through Friday between 8:30 a.m. and 5 p.m. Pacific time. Information also is available online at www.ETradeARSBuyIn.com. Investors may also contact the firm's ARS Administrator by mail at E*TRADE Financial ARS Administrator, P.O. Box 9829, Dublin, Ohio 43017-5729 and by e-mail at Info@ETradeARSBuyIn.com.

The settlement with E*TRADE is the result of a multi-state investigation led by the Colorado Division of Securities, with assistance from the Texas State Securities Board. E*TRADE is just one of the companies state regulators have investigated for falsely assuring investors that auction rate securities were a safe alternative to cash that could be accessed at almost any time. In fact, auction rate securities are long-term bonds subject to a complex auction process that, upon failure, can result in accounts being frozen.