The two alleged email spammers also face criminal charges in addition to the SEC enforcement action:
Prosecutors say two men made more than $1 million through cyber stock scam
By Larry Neumeister, Associated Press, 2/24/2000 19:18
NEW YORK (AP) Two men exploited ''the dark side of the Internet'' when they made more than $1 million by driving up the value of penny stocks with a flood of e-mails disguised as if they had been sent by America Online, a prosecutor said Thursday.
U.S. Attorney Mary Jo White announced the securities fraud charges against James Sheret Jr. and Glenn Conley in connection with a nationwide, Internet-based scheme involving about 60 companies.
''This is the dark side of the Internet,'' White said in a statement. ''Determined fraudsters can swindle a virtual audience by taking large positions in thinly traded stocks, disseminating hundreds of thousands of spam e-mails touting these stocks and then sell them into the fraudulently inflated market they have created.'' [...]
boston.com
2 Accused of Using E-Mail to Commit Stock Fraud
By ALEX BERENSON
[...]The e-mail messages were often addressed as if they were being sent between friends, in an effort to give the recipients the feeling that they had accidentally received a hot tip, said Donald M. Hoerl, district administrator of the S.E.C.
The message usually included the current price of the stock, a target price much higher than the current price, and a notation like, "Take a close look at this stock, it's on the rise." The indictment charges that that was true only because Mr. Sheret and Mr. Conley were buying the stocks to drive up their prices before sending the e-mail messages.
The messages usually caused a short-term increase in the price of the stocks, and the two men generally sold their shares after the increase, the indictment charges.
For example, Mr. Sheret bought 200,000 shares of Sports Heroes Inc., an Oklahoma-based marketer of sports trading cards, for 2.44 cents a share on Jan. 13, according to the indictment. Then Mr. Sheret promoted the company six times over the next five days, causing its price and volume to surge, the indictment charges. On Jan. 18, he sold his shares for 27.87 cents each, making a profit of more than $50,000. Sports Heroes stock peaked the next day at 43.75 cents. It now trades for 10 cents a share. [...]
nytimes.com
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