Re: 3/6/01 - [IVEH] WSJ: Trading in Ives Health Is Halted by SEC Action
Wall Street Journal - March 6, 2001
Aaron Elstein
Trading in Ives Health Is Halted by SEC Action
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The Securities and Exchange Commission halted trading Monday in shares of Ives Health Co. after regulators questioned the "accuracy and adequacy" of its statements about an AIDS treatment.
Shares of Ives Health, which sells homeopathic remedies over the Internet and in stores, rocketed to 73 cents from six cents on Feb. 16 after the company reported a "breakthrough" treatment for AIDS. Trading under the symbol IVEH on the OTC Bulletin Board, the shares closed at 25 cents on Friday, the last day of trading before the SEC's 10-day suspension.
An SEC official said the sudden spike in the company's stock, combined with thousands of postings on the stock-chat site Raging Bull (www.ragingbull.com), captured the commission's attention.
Michael Harrison, chief executive of Ives Health, wasn't available to comment on Monday. The company founder and president, Keith Ives, didn't return a call to his home in Claremore, Okla.
In a brief statement Monday, the company said it was "surprised" by the trading halt and "intends to cooperate fully with the SEC."
On Feb. 15, Ives Health issued a press release saying it had "incredible news" thanks to a treatment with "dramatic" results in helping people with AIDS-resistant infections. The product costs $49 for 60 capsules.
The company, based in Claremore, issued another release Feb. 19 saying that word of a study about its treatment was gaining world-wide attention from both investment and health-care communities.
New drugs in the U.S. require approval by the Food and Drug Administration. But the public-relations firm that represents Ives Health said in a recent interview that its AIDS treatment doesn't need FDA approval because it is "all natural." The spokeswoman, Georgia Mowers of Strategic Communications in Carson City, Nev., said she wasn't aware of any professional AIDS researchers outside the company reviewing the treatment, although the company's founder and president, Keith Ives, "has conducted a few interviews" with people who have taken it.
Ives Health's business up to now, according to its regulatory filings, has been developing over-the-counter "natural medicines, herbal formulas and homeopathic medicines" for such ailments as acne, sore throats and menstrual cramps. According to its most recent financial statements, the company reported a loss of $297,000 for the quarter ending Sept. 30 on revenue of $106,000, compared with a loss of $105,100 and revenue of $230,000 in the year-earlier period.
Ives Health isn't the first company to be suspended by the SEC after saying it has developed an AIDS treatment. In July 1999, the commission halted trading in Uniprime Capital Acceptance Inc., whose shares soared to $7.94 on the OTC Bulletin Board from less than $1 in a few days after the Las Vegas company claimed it had developed a "major breakthrough" for treating AIDS.
The following month, U.S. criminal prosecutors charged the company's president, Alfredo J. Flores, with securities fraud, and the SEC also filed a civil suit against him. Mr. Flores pled guilty to one count of criminal securities fraud and is awaiting sentencing, while the SEC's civil suit against him is pending, said Dorothy Heyl, an SEC attorney handling the case.
When Uniprime Capital's stock resumed trading, it quickly fell to three cents a share and no longer trades. The company filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code last year, according to the SEC.
The rise in shares of Ives Health suggests that some investors are regaining their appetite for stocks quoted on the OTC Bulletin Board, a lightly regulated market for large-capitalization stocks as well as more speculative penny stocks that are sometimes called microcaps.
The Bulletin Board is run by the National Association of Securities Dealers, which also runs the Nasdaq Stock Market. But the Bulletin Board has less stringent listing requirements than the Nasdaq or New York Stock Exchange, which mandate that companies be of a certain size and have a minimum number of a shareholders.
The NASD has taken steps to improve the quality of companies whose stocks are quoted on Bulletin Board, delisting those that fail to file timely financial statements.
More than eight billion shares traded on the Bulletin Board in January, and five billion were traded in February, according to the NASD. The January volume represented the highest levels since last March's high of 25 billion.
"There's good value in the microcap sector again," says Rich Kaiser, president of Yes International Inc., a Virginia Beach, Va., financial public-relations firm that accepts fees for promoting stocks.
"People looking for 300% or 400% rallies in stocks aren't finding them in the blue chips or Nasdaq [Stock Market], so they're turning to the microcap sector."
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