Stock Gate players and their Victims revealed; Write your Broker and ASK If they have taken steps to Stop this activity within their company.....All these broker dealer firms enjoy respectability due in part to their Brand building campaigns...Investors must begin to demand more from their host account managers, because if we dont, they'll do it every time.
StockGate: SEC Leaves OTCBB Corporate, Investor Community Aghast, Outraged
Feb 2, 2004 (financialwire.net via COMTEX) -- (FinancialWire) What's a little
"loophole" between friends? If it's between the U.S. Securities and
Exchange Commission and the National Association of Security Dealers, it is a
jaw-dropping, mouth-gaping one for many small public companies and their
investors.
The scandal known as StockGate has embroiled hundreds of companies and dozens of
brokers and marketmakers, including M. H. Myerson & Co., Inc. (NASDAQ: MHMY),
Olde / H&R Block (NYSE: HRB), Charles Schwab (NYSE: SCH), and Ameritrade Holding
Corp. (NASDAQ: AMTD) in a web of internaitional intrigue, manipulative
short-selling and cross-border accusations and denials.
The issue seemed to be coming to a head as comments closed January 5 on an SEC
staff proposal to ban many forms of naked short selling through proposed
Regulation SHO.
But nothing has rocked the over-the-counter bulletin board world like the recent
revelation that SEC had "sat" on a request by the NASD to close the
major international loophole involving manipulation by Canadian and other
overseas traders and brokers for over two years, since November, 2001, in fact.
The NASD had been the brunt of equal parts of the outrage from burned small
investors, many suggesting the NASD was protecting its membership from potential
losses if naked short selling shut down; but now it turns out to have been at
least partly undeserving, as the SEC did nothing about a key reform proposed by
the NASD itself.
During that period, the SEC brought actions against several manipulators and the
industry outcry was raised to a roar. The NASD, recognizing the problem, offered
one key solution. Yet, through it all, the SEC sat, telling investors at one
point to "seek other solutions" to the problem. All the while, small
investors were losing millions and millions of dollars, and small companies were
losing market cap, the ability to borrow and any opportunity which the public
markets supposedly provided them, to grow.
"Now that they have admitted the problem, how do they fix what they
did?" asked Gary Valinoti, CEO of Jag Media Holdings (OTCBB: JGMHA), which
has filed suit against dozens of market makers for alleged improprieties in the
trading of the company's stock.
"It's a sad statement to the politicization of the SEC that in recent cases
they are spending their efforts and resources pushing out the fiefdom of the SEC
rather than protecting the small investors. Sadly enough, the whole industry
works that way. Small broker dealers aren't allowed to grow to be big broker
dealers because of industry regulations and procedures promigulated by boards
dominated by the largest financial houses," said Marshal Shichtman, Esq., an
attorney notable for his successful negotiations to remove two public companies
from the Depository Trust and Clearing Corp., which has been accused by many of
failing to settle electronic trades.
The SEC had denied that the DTC system is broken, and part of the problem, but
the North American Association of Securities Administrators, whose membership
consists of all of the states, Mexico, Puerto Rico and Canada, including the
high profile attorneys general of New York and Massachusetts, recently pointedly
told the SEC that it should take another look at its attitude towards the DTC.
"NASAA urges the Commission to reconsider its stance regarding the role of the
Depository Trust and Clearing Corporation (the DTC). As a threshold matter,
NASAA believes that the Commission should explicitly prohibit the DTC from
lending more shares of a security than it actually holds. The ability of the
overall proposed rule would be severely impaired unless the Commission
undertakes to implement such a prohibition," stated Ralph Lambiase, NAASA
president and Director of the Connecticut Division of Securities.
Shichtman said reforms should include the appointment of a Commissioner who is
actually from the small investor community, "a genuine seat at the
table."
Scott W. Hatfield, CPA, who audits numerous small public companies, suggested
that the SEC may have a conflict of interest since it is "partially
self-funded," receiving an SEC fee charged to the customer for every trade.
He pointed out that if manipulative short selling is shut down, this could
impact the SEC's revenue.
He also said that the "SEC makes an on-site audit of all broker-dealers on
an annual basis at an unannounced time. Unfortunately, being creatures of habit,
it seems that the SEC comes to the broker's office within a 2-week window each
year. It's pretty easy to bring the records up to speed if you know when the
Commission is showing up."
Hatfield: "Back in 1929-1934, the United States was an agricultural based
economy on the edge of shifting to an industrial/manufacturing economy. In 2004,
the United States is a financial instrument based economy with significant
decreases in the contributions to the GDP from the agricultural and
manufacturing segments. As such, why hasn't Congress taken the facilities and
financial resources of the Department of Agriculture and the Securities and
Exchange Commission and swapped them to better reflect the contributions to the
U.S. economy?"
"We closed a loophole," Steve Luparello, executive vice president of Market
Regulation at NASD, was quoted as saying, regarding the decision to require its
members to stringently enforce the "affirmative determination" rule.
"Until now, non-NASD members, like specialists, option markets and foreign
brokers, weren't covered under the affirmative determination rule. That means
that non-NASD members didn't have to represent to the NASD broker through which
they conducted a short sale order that they would be able to deliver the stock
by settlement date," noted Carol Redmond, writing for Dow Jones.
The amended rule will dramatically affect short sales through non-U.S. brokers,
particularly Canadian brokers that have taken advantage of the loophole to abuse
hundreds of small U.S. public companies, mostly trading on the Over-the-Counter
Bulletin Board administered by NASDAQ and their shareholders.
While the new rule doesn't require anything of Canadian brokers, U.S. brokers
are now required to assure themselves that Canadian brokers will be able to
settle within three days.
Luparello was quoted as telling Dow Jones that "a non-member's previous
failures to deliver should be a
good indication of whether or not it will in fact be able to complete the
transaction by the settlement date," effectively clamping down on the worst
abusers.
The rule will become effective February 20. It is on the web at
nasdr.com
Comments on Regulation SHO ended January 5, and may be viewed at
sec.gov
Some 121 companies, including 13 brokers, such as FleetBoston (NYSE: FBF),
Goldman, Sachs & Co. (NYSE: GS), H. Myerson & Co., Inc. (NASDAQ: MHMY), Olde /
H&R Block (NYSE: HRB), Charles Schwab (NYSE: SCH), Toronto-Dominion's (NYSE:
TD), TD Waterhouse Group and vFinance, Inc. (OTCBB: VFIN). A.G. Edwards at, Inc (NYSE: AGE), Ameritrade Holding Corp. (NASDAQ: AMTD), Deutsche Bank AG (NYSE:
DB), and E*Trade Group, Inc. (NYSE: ET), have been embroiled for over a year in
a raging controversy
The remaining 108 companies among the 121 named to date have issued press
releases or been named in the media as having been victimized, or as taking
various actions, either alone or in concert with other companies, to oppose
manipulative trading in the form of illegal naked short selling. The actions
have ranged from lawsuits to withdrawals and threatened withdrawals from the
electronic trading system managed by the Depository Trust & Clearing Corp., to
withdrawals from toxic financings, to the issuance of dividends or name changes
designed to squeeze manipulators, to joining associations or networks or to
contacting regulatory authorities to provide documentation of abuses or
otherwise complain.
The complete list of those 108 companies include Advanced Viral Research Corp.
(OTCBB: ADVR), AdZone Research, Inc (OTCBB: ADZR), Amazon Natural Treasures
(OTC: ANTD), America's Senior Financial Services (OTCBB: AMSE), American
Ammunition, Inc. (OTCBB: AAMI), AngelCiti Entertainment (OTCBB: AGLC), ATSI
Communications, Inc. (OTC: ATSC), Federal Agricultural Mortgage / Farmer Mac
(NYSE: AGM) Allied Capital (NYSE: ALD), American Motorcycle (OTC: AMCYV),
American International Industries (OTCBB: AMIN), Ameri-Dream (OTC: AMDR),
Adirondack Pure Springs Mt. Water Co. (OTCBB: APSW), ATSI Communications, Inc (OTC: ATSC) Bluebook International (OTCBB: BBIC), Blue Industries (OTCBB:
BLIIV), Bentley Communications (OTCBB: BTLY), BIFS Technologies Corporation
(OTCBB: BIFT), Biocurex (OTCBB: BOCX). Broadleaf Capital Partners, Inc (OTCBB:
BDLF), Chattem, Inc. (NASDAQ: CHTT), Critical Home Care (OTCBB: CCLH), Composite
Holdings (OTC: COHIA), CyberDigital, Inc. (OTCBB: CYBD) Diamond International
Group (OTCBB: DMND), Dobson Communications Corp (NASDAQ: DCEL), Eagle Tech
Communications (OTC: EATC), Edgetech Services (OTCBB: EDGH);
Also, Endovasc Ltd. (OTCBB: EVSC), Enviro-Energy Corporation (OTCBB: ENGY),
Environmental Products & Technologies (OTC: EPTC), Environmental Solutions
Worldwide, Inc. (OTCBB: ESWW), EPIXTAR Corp (OTCBB: EPXR),
eResearchTechnologies, Inc. (NASDAQ: ERES), Flight Safety Technologies (OTCBB:
FLST), Freddie Mac (NYSE: FRE), FreeStar Technologies (OTCBB: FSRCE), Geotec
Thermal Generators, Inc. (OTCBB: GETC), Genesis Intermedia (OTC: GENI), GeneMax
Corp. (OTCBB: GMXX), Global Explorations Inc (OTC: GXXL), Global Path (OTCBB:
GBPI), GloTech Industries, Inc. (OTCBB: GTHI), Green Dolphin Systems (OTCBB:
GLDS), Group Management (OTCBB: GPMT), Hop-On (OTC: HPON), H-Quotient, Inc.,
(OTCBB: HQNT), Hyperdynamics Corp (OTCBB: HYPD), International Biochem (OTCBB:
IBCL), Intergold Corp. (OTCBB: IGCO), International Broadcasting Corporation
(OTCBB: IBCS), InternetStudios, Inc (OTCBB: ISTO), ITIS Holdings (OTCBB: ITHH),
Investco Corp. (OTCBB: IVCO), Lair Holdings (OTC: LAIR), Lifeline
BioTechnologies Inc. (OTC: LBTT), Life Energy & Technology (OTCBB: LETH), MBIA
(NYSE: MBI);
Also, MegaMania Interactive (OTC: MNIA), MetaSource Group, Inc. (OTCBB: MTSR),
Midastrade.com (OTC: MIDS), Make Your Move (OTCBB: MKMV), Medinah Minerals (OTC:
MDMN), MSM Jewelry Corp. (OTC: MSMC), Nanopierce Technologies, Inc. (OTCBB:
NPCT), Nutra Pharmaceutical (OTCBB: NPHC), Nutek (OTCBB: NUTK), Navigator
Ventures (OTC: NVGV), Orbit E-Commerce, Inc. (OTCBB: OECI), Pitts & Spitts (OTC:
PSPP), Sales OnLine Direct (OTCBB: PAID), Pacel Corp (OTCBB: PACC), PayStar
Corporation (OTC: PYST), Petrogen Corp. (OTCBB: PTGC), Pinnacle Business
Management (OTC: PCBM), Premier Development & Investment, Inc. (OTCBB: PDVN),
PrimeHoldings.com, Inc. (OTC: PRIM), Phlo Corporation (OTCBB: PHLC), Resourcing
Solutions (OTC: RESG), Reed Holdings (OTC: RDHC), Rocky Mountain Energy Corp.
(OTCBB: RMECE), RTIN Holdings (OTCBB: RTNHE), Saflink Corp (NASDAQ: SFLK), Safe
Travel Care (OTCBB: SFTVV), Sedona Corp (OTCBB: SDNA);
Also, Sionix Corp. (OTCBB: SINX), Sonoran Energy (OTCBB: SNRN), Starmax
Technologies (OTC: SMXIF), Storage Suites America (OTC: SSUA), Suncomm
Technologies (OTC: STEH), Sports Resorts International (NASDAQ: SPRI), Technology
Logistics (OTC: TLOS), Swiss Medica, Inc. (OTCBB: SWME), Ten Stix, Inc (OTCBB:
TNTI), Tidelands Oil (OTCBB: TIDE), Titan Construction (OTC: TTCS), Trezac Corp (OTCBB: TRZAV), Universal Express, Inc. (OTCBB: USXP), Valesc Holdings, Inc (OTCBB: VLSHV), Vega Atlantic (OTCBB: VGAC), Viragen (AMEX: VRA), Viragen
International (OTCBB: VGNI), Vista Continental Corporation, (OTCBB: VICC), Viva
International (OTCBB: VIVI), Vtex Energy (OTCBB: VXENE) and Wizzard Software
(OTCBB: WIZD), WorldTradeShow.com (OTC: WTSW) and Y3K Secure Enterprise
Software, Inc. (OTCBB: YTHK)
Earlier in 2003, the SEC fined Rhino Advisors, Inc., $1 million for its
representation of Amro International in the financing and manipulation of Sedona
Corp. Amro, also known as AMRO, was registered in Panama, a secretive offshore
haven, but was not named in the SEC settlement. Another 60 public companies may
have been manipulated by the fined Rhino Advisors and its indicted principals,
or its funding apparatus, Amro.
These include:
All American Food Group Inc (OTC: AAFGQ), Amanda Co Inc (OTC: AMNA), Antra
Holdings (OTC: RECD), Aquis Communications Group Inc (OTCBB: AQUIS), Avanir
Pharmaceuticals (AMEX: AVN), Bionutrics Inc (OTC: BNRX), Brilliant Digital
Entertainment Inc (AMEX: BDE), Bravo! Foods International Corp (OTCBB: BRVOE),
Butler National Corp (NASDAQ: BUTL), Calypte Biomedical Corp (OTCBB: CYPT),
Chemtrak Inc/DE (OTC: CMTR), Clicknsettle Com Inc (OTCBB: CLIK), Corporate
Vision Inc (OTC: CVIA), Crown Laboratories Inc/DE (OTC: CLWB), Dental Medical
Diagnostic Systems Inc (OTC: DMDS), Detour Media Group Inc (OTC: DTRM),
Also, Digital Privacy Inc/DE (OTC: DGPV), Senior Services Inc (OTC: DISS),
International Inc (OTC: DYNX), Endovasc Ltd Inc (OTCBB: EVSC), Esynch Corp/CA
(OTCBB: ESYN), Focus Enhancements Inc (NASDAQ: FSCE), Frederick Brewing Co (OTC:
FRBW), Greystone Digital Technology Inc (OTC: GSTN), Havana Republic Inc/FL
(OTCBB: HVNR), Henley Healthcare Inc (OTC: HENL), Hollywood Media Corp (NASDAQ:
HOLL), Ibiz Technology Corp (OTCBB: IBZT), Diagnostic Systems Inc/FL (OTCBB:
IMDS), Imaging Technologies (OTCBB: IMTO), Integrated Surgical Systems Inc
(OTCBB: RDOC),
Also, Interferon Sciences Inc (OTC: IFSC), Interiors Inc (OTC: ITRNA), Laminaire
Corp (OTC: THMZ), Medisys Technologies Inc (OTC: SCEP), Milestone Scientific
Inc/NJ (AMEX: MS), Nevada Manhattan Group Inc (OTC: NVMH), Innovations Inc
(OTCBB: NTGE), Systems Group (OTC: OSYM), Pacific Systems Control Technology Inc
(OTCBB: PFSY), Professional Transportation Group Ltd Inc (OTC: TRUC), Rnethealth
Inc (OTC: RNTT),
Also, Sand Technology Inc (NASDAQ: SNDT), Sedona Corp (OTCBB: SDNA), Silverado
Foods Inc (OTC: SVFO), Stockgroup Information Systems (OTCBB: SWEB) Surgilight
Inc (OTC: SRGL), Tasty Fries Inc (OTCBB: TFRY), Tech Laboratories Inc (OTCBB:
TCHL), Teltran International Group Ltd (OTC: TLTG), Titan Motorcycle Co of
America Inc (OTC: TMOTQ), Trans Energy Inc (OTCBB: TSRG), Motorcycle Co (OTC:
UMCC), Universal Communication Systems Inc (OTCBB: UCSY), Medical Systems Inc
(OTC: UMSI), Vianet Technologies Inc (OTC: VNTK),Viragen Inc (AMEX: VRA),
Webcatalyst Inc (OTC: WBCL), Worldwide Wireless Networks Inc (OTCBB: WWWNQ), and
ZAP (OTCBB: ZAPZ)
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