+*ROSARIO* (4019 )
From: +steve walsh
Wednesday, Oct 28 1998 1:15PM ET
Reply # of 4021
Off topic: Ring a bell??
NEWS STORY FOR I/SCR 2021 11:54 SEC/Internet Fraud-2: Allege Stock Touts
Didn't Disclose Pay : I/SCR G/SEC N/DJN N/DJWI N/NET N/STK M/FIN P/DIS
R/NME R/US By Judith Burns WASHINGTON (Dow Jones)--In its first coordinated
strike against Internet stock fraud, the Securities and Exchange Commission announced
Wednesday it has filed 23 cases against 44 individuals and companies, alleging online
fraud. "People say it's impossible to police the Internet," said Richard Walker, director
of the SEC's enforcement division. "We think they're wrong." At a press conference at
the SEC, Walker announced the agency's first-ever, nationwide crackdown on
fraudulent online newsletters, message board postings, web sites, and "spams," or online
junk mail. In the 23 cases, the SEC alleged individuals and companies violated federal
antifraud and antitouting provisions by pitching stocks without disclosing that they
received compensation - either in cash, stock or stock options - to make the pitch. The
SEC also alleged that defendants lied about the companies they touted and about their
relationships to the companies. While many claimed to be independent, "we allege that
they were bought and paid for" by the companies whose shares they recommended,
said Walker. Altogether, the SEC estimates that $6.2 million of cash, and 1.8 million
shares of stock and options in more than 235 microcap companies were exchanged in
the 23 cases. In some instances, the SEC also alleges that online promoters sold their
stock or exercised their options immediately after recommending the company, a
practice known as "scalping." The extent of investors' losses due to scalping in these
cases isn't known, said Walker. But, he stressed that online fraud is on the rise, and
cautioned investors to be wary of any stock pitch made on the Internet. "This is a
problem that we believe is prevalent and persistent," said Walker. Underscoring that,
the SEC's sweep pulled in a Chicago-based Internet newsletter, called the Future
Superstock, a Florida-based Internet stock service, called StockstoWatch, and a
California Internet stock touter who created his own web site dubbed the "Investors
Edge. 11:54 AM- - 11 54 AM EST 10-28-98 |
