Re: 3/16/05 - [CMKM] Stockwatch: CMKM now faces SEC administrative proceeding
CMKM now faces SEC administrative proceeding
2005-03-16 20:36 ET - Street Wire
by Lee M. Webb
CMKM Diamonds Inc., a massively diluted subpenny pink sheet promotion headed by Saskatchewan native Urban Casavant, is now the subject of a U.S. Securities and Exchange Commission (SEC) administrative proceeding. The March 16 regulatory action comes as a 10-day SEC-imposed trading suspension comes to an end.
The SEC alleges, possibly to little suprise, that CMKM is delinquent with its required periodic filings. Specifically, the U.S. regulator alleges that CMKM has not filed an annual report since May 9, 2002, or quarterly reports since Nov. 18, 2002.
The company has 20 days to answer the allegations. In the event that CMKM does not answer the allegations or fails to appear at a public hearing to be scheduled before an administrative law judge, the company may be deemed in default and a determination made against it.
If the allegations are found to be true, a determination will be made whether to issue an order suspending CMKM for not more than 12 months or revoke the company's registration.
According to the SEC order, the administrative law judge must issue an initial decision in the matter within 120 days.
In the event that the registration of the company's securities is revoked, the nearly worthless 703.5 billion shares issued and outstanding will be completely worthless.
It remains to be seen what, if any, defence CMKM's touted crackerjack securities attorney Donald J. Stoecklein will attempt to establish, given that the company has already acknowledged that it has reporting obligations.
As previously reported by Stockwatch, Mr. Casavant's pink sheet promotion filed a Form 15 with the SEC on July 23, 2003, claiming that it had approximately 300 shareholders of record and, as provided by securities regulations for issuers with fewer than 300 holders of record, was terminating its reporting obligations.
That filing was inaccurate.
In fact, CMKM had 698 shareholders of record at the time of the original filing. On Feb. 17 of this year, the company filed an amended Form 15 acknowledging that the original filing was incorrect and that it in fact had reporting obligations all along.
Whatever the outcome of the administrative hearing that will be held some time between 20 and 120 days of today's order, it may not mark the end of the SEC's interest in CMKM.
Indeed, following the SEC suspension issued on March 3, CMKM issued a news release indicating that the company did not believe that the trading suspension was triggered by the amended Form 15 acknowledging its reporting obligations that was filed on Feb. 17. Rather, CMKM suggested that the suspension was prompted by concerns raised during an SEC inquiry into a related company.
While CMKM did not name the other company being investigated by the SEC, there is little doubt that it is closely associated U.S. Canadian Minerals Inc., which was suspended by the SEC last October and has acknowledged that it is the subject of a continuing SEC investigation.
In any event, it is clear from the SEC suspension issued against CMKM on March 3 that the U.S. regulator has some serious concerns about Mr. Casavant's pink sheet company.
Among other things, the U.S. regulator noted that questions had been raised regarding CMKM's assets and liabilities, mining and other business activities, share structure and stock issuances and corporate management.
The SEC is also concerned that CMKM may have unjustifiably relied on a Form S-8 to issue unrestricted securities. Rounding out the concerns identified on March 3, the SEC raised the spectre of a possible illegal distribution of securities by the company or certain of its shareholders.
CMKM has been claiming that it has been diligently working toward fully reporting compliance for about a year, particularly since it hired another crackerjack securities attorney last year, the highly touted D. Roger Glenn of Edwards & Angell.
As it turned out, the ballyhooed Mr. Glenn, currently working for SEC target U.S. Canadian Minerals, did not produce a single regulatory filing for CMKM before he was replaced by Mr. Stoecklein in February.
In the March 4 response to the SEC suspension, CMKM's recently appointed co-chairman Robert Maheu said that the company has "been aggressively gathering the essential information" needed to comply with its reporting obligations.
To this point, CMKM's aggressive gathering has resulted in two SEC filings, neither of them of much significance in light of the serious questions raised by the U.S. regulator so far.
On March 8, Mr. Maheu filed an initial statement of beneficial ownership disclosing that he holds absolutely no shares in the company. That was followed by a March 14 filing disclosing material events that consisted primarily of some recent news release and a few historical amendments to CMKM's Nevada articles of incorporation.
So far, there has been no disclosure of any financial information or matters such as stock issuances that led to the company currently having a staggering 703.5 billion shares issued and outstanding.
It remains to be seen whether the company will make good on its announced plan to meet its reporting obligations.
Further, it remains to be seen whether the SEC will yank CMKM's registration within the next four months, sending the company into the void.
The SEC trading suspension against CMKM expires at 11:59 this evening.
In light of the SEC administrative proceeding and the possibility that the company's stock may be rendered completely worthless within the next 120 days, it also remains to be seen whether any investors will be adventurous enough to purchase shares of the massively diluted pink sheet promotion.
CMKM last changed hands on March 2, closing at two-100ths of a U.S. cent.
The saga continues.
Comments regarding this article may be sent to lwebb@stockwatch.com.
(More information regarding CMKM Diamonds and associated companies can be found in Stockwatch articles dated Oct. 21, 2003; June 22; Sept. 16 and 24; Oct. 1, 15 and 20, 2004; and Feb. 11, 14, 18, 22 and 23; and March 1, 3, 4, 7, 14 and 15, 2005.)
stockwatch.com |
