Sunday night's Interactive WSJ has a story on cyberfraud, specifically focusing on 'the old pump and dump' schemes. Here's a small excerpt relating to a newsletter/advisory service.
<<But unknown to Mr. Fontaine, Systems of Excellence's chairman and chief executive officer, Charles Huttoe, was selling his own shares into a market inflated by false, favorable press releases, according to the Securities and Exchange Commission. The SEC also charged that SGA Goldstar received shares in the company to write favorably about it -- and sold them for a hefty profit.
The SEC filed a complaint against Systems of Excellence for manipulating its stock by making rosy company forecasts and then selling shares as its stock shot higher on the news. In January, Mr. Huttoe was sentenced to a federal prison term of 46 months and fined $10,000 for one count of securities fraud and one count of money laundering. In all, the SEC estimates, investors were duped out of $12 million.
SGA's publisher, Theodore Melcher Jr., is trying to settle SEC civil charges that he profited illegally by promoting and profiting from stock he owned in Systems of Excellence, he says.>>
I'm not accusing anyone of anything, but I think I will be very careful to find out what anyone's disclosure policy is before investing. For example, Dow Jones adds in the article that their policy is NO employee may trade in options or futures, nor may they trade in and out in less than 6 months, NOR may they even go short anything. I'm not advocatiing everyone who publishes financial info to adopt this strict a code, but investors would benefit from knowing what the policy is, and the company would benefit knowing that their employees are on notice that the SEC's regulations must be adhered to. I hope we hear from Westergaard on exactly what their policies are. |
