And not a moment too soon:
SEC Cracks Down on Email Pump and Dumps
Seven Actions Against 31 Defendants For Violations in Connection with Email and Website Stock Promotions
By Mark J. Astarita, Esq.
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For those of you who are tempted to follow the "investment advice" that you receive in emails, or that you find on the Internet, the SEC has a wake-up call for you. The scammers are still out there.
On October 23, 2003 the SEC announced the filing of 7 different actions against 31 corporations and individuals as part of a crackdown on unregistered stock distribution schemes. While distributions of unregistered stock is a violation of the securities laws, of particular interest is that each of these violations were accompanied by a pump and dump scheme, using email and websites.
The common thread in all of these actions is that a promoter is hired by a public company to promote its securities, and receives as part of its compensation shares of the company's stock. In each case, the company used circuitous means of delivering the stock to the promoters, in order to avoid registration, and detection of the transfer. And in each case, the email and marketing campaign had the effect of increasing the price of the stock, and the promoter immediately sold the stock that he had received.
The net effect of all of this of course, is that innocent investors purchased the stock that these individuals sold, at grossly inflated prices.
The SEC's press release, and links to the individual cases follow.
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SEC CHARGES INTERNET STOCK PROMOTERS AND PUBLIC COMPANIES WITH PARTICIPATING IN UNREGISTERED DISTRIBUTIONS OF SECURITIES
The Commission today instituted seven administrative proceedings
seclaw.com |
