Hi Jay and all,
I obtained an excerpt of SEC Chairman Levitt's testimony on Fraud in the Micro-Cap Market. He testified before the Senate Permanent Subcommittee on Investigations on Monday, September 22.
Here goes.....
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United States Senate
September 22, 1997
Extract from Page 15-16.....
.... "The commission recently implemented a pilot program in our Florida regional office to intervene as soon as a potential sham micro cap offering is identified, which has already resulted in six trading suspensions.(note. 25) The staff reviews regulatory filings for irregularities, or "red flags", that suggest the company may not be legitimate. After determining that the public interest and protection of investors require it, the Commission can suspend trading in the stock. Trading suspensions can be a very potent remedy because:
* Investors are put on notice of a potential fraud, hopefully
encouraging more informed decision-making; and
* Promoters and brokers are hit where it hurts most: in the pocketbook. The financial reward of a micro cap scheme depends on selling all the stock at the height of the manipulation. A trading suspension often leaves the promoters holding worthless stock before they are able to dump it on unsuspecting investors.
Although a trading suspension only halts trading for a ten-day period, the suspension triggers application of Exchange Rule 15c2-11, which require a market maker to have current and accurate financial information about the issuer before trading resumes. In other words, it is difficult for a broker-dealer to lawfully resume trading."
(Notes #25:
In the Matter of Amquest International, Ltd., Exchange Act Release No. 38695 (May 30, 1997), 64 SEC Docket 1862 (July 1, 1997);
In the Matter of Green Oasis Environmental, Inc., Exchange Act Release No. 38588 (May 9, 1997), 64 SEC Docket 1395 (June 10, 1997);
In the Matter of Genesis International Financial Services, Inc., Exchange Act Release No. 38565 (May 1, 1997), 64 SEC Docket 1259 (May 27, 1997);
In the Matter of Historic Hotel Holdings, Inc., Exchange Act Release No. 38492 (Apr. 10, 1997), 64 SEC Docket 761 (May 6, 1997);
In the Matter of Omnigene Diagnostics, Inc., Exchange Act Release No. 37966 (Nov. 19, 1996), 63 SEC Docket 709 (Dec. 17, 1996);
In the Matter of Home Link Corp., Inc., Exchange Act Release No. 37292 (June 10, 1996), 62 SEC Docket 288 (July 9, 1996).
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Second sentence. "...that suggest the company may not be legitimate."
There they go again. Tell a half-truth enough times and soon it becomes the truth in the eyes of the public, right?
LLLP Mark |
