JMHOLLEN BANNED ME FROM THE IBCS SI THREAD. ALLS I DID WAS POST THIS STORY ABOUT DARYN FLEMING. YOU WOULD THINK INVESTORS WOULD WANT TO KNOW THINS KIND OF INFORMATION.
re:Daryn Fleming: WSJ: Web Stock-Promoter Floods Message Boards With Hype
July 17, 1998 Heard on the Net
Daryn Fleming is a regular participant in Silicon Investor on-line
message boards, often urging others to buy stocks and hinting about
news to come. "Acquisition in the works," he wrote on one board.
"Another big story due out Tuesday! I would buy more..." he wrote on
another.
But what isn't always clear from Mr. Fleming's posts is that his firm
is paid to promote the companies.
Mr. Fleming is president of Wall Street West, which describes itself as
a "stock research firm and holding company." For a fee, Wall Street
West promotes companies as its stock picks on its Web site, and in many
cases writes research reports that include "buy" recommendations on the
stocks. It also sends out mass mailings of electronic mail and press
releases promoting the companies. Its Web site lists offices in Denver
and Las Vegas. Mr. Fleming says 15,000 people have signed up to receive
the site's "stock alerts" via e-mail.
Mr. Fleming says when he talks up companies on the Silicon Investor Web
site (www.techstocks.com1) he is acting as an "individual investor,"
and not on behalf of Wall Street West. "I post because I have opinions
on these companies, and sometimes I get pretty excited about them.
Often I'll put my own money into these companies," he says.
Mr. Fleming says that other Silicon Investor users know that he is
president of Wall Street West and is paid to promote companies. "I say
that in most of my postings because of the potential conflict of
interest," he says. But in his last 75 messages posted on Silicon
Investor, Mr. Fleming doesn't make any disclosures about receiving
payments. He occasionally identifies himself or his affiliation with
Wall Street West.
In a sales pitch to prospective clients on Wall Street West's Web site
(www.wallstreetwest.com2), the firm says it can disseminate information
on companies through a variety of outlets, including message boards.
"There are more than 30,000 electronic bulletin boards on the Internet.
We have the ability to post messages on these boards, targeting
prospective investors," according to the site.
Of the 15 companies listed as "selected stocks" on the Wall Street West
site, 11 have message boards on Silicon Investor. Mr. Fleming has been
an active participant in all of them.
In an interview Thursday, Mr. Fleming said that he has slowed down in
posting to Silicon Investor. "I think you're going to see a lot less
posting from me, and it will probably stop entirely, because I think
some people could see it as a conflict of interest and we don't want
that," he said.
Still, early Friday, Mr. Fleming created a new message board on Silicon
Investor dedicated to MobileVest, a company in a Sebring, Fla., that
manages manufactured housing communities. Wall Street West issued a
research report and "buy" recommendation on MobileVest late last week.
For its part, Silicon Investor says it discourages users who post
nothing but hype about companies and sometimes intervenes when the hype
becomes excessive. Jill McKinney, Silicon Investor's Webmaster, says
the discussion forum tries to watch for paid stock promoters, but
admits it can be difficult to identify them. "If we knew someone were
being paid by a company to post on our site, I'm sure that we would do
something about it," she says.
Wall Street West's first client, Mr. Fleming says, was U.S. Basketball
League, a group that franchises minor league basketball teams. Mr.
Fleming began posting on a message board devoted to the company shortly
after being retained by the company. "Rumors abound about ... oh I
won't say what. I will say BUY BUY BUY. GO USBL!" he wrote in one of
the first messages on the forum. "Looks like this thing could explode!"
he wrote in another. He repeatedly suggested that others buy the stock,
and predicted the stock, which is quoted on the OTC Bulletin Board for
around $2.20 a share, would reach $5 a share.
Mr. Fleming never revealed on the U.S. Basketball message board that he
was president of Wall Street West, or that his company had received
compensation in exchange for promoting U.S. Basketball.
A spokesman for U.S. Basketball, which is based in Milford, Conn.,
couldn't be reached for comment.
Mr. Fleming declines to say how much U.S. Basketball paid Wall Street
West in exchange for promotion. He says he believes a disclaimer at the
bottom of the Web site's front page is enough. It alerts users that the
company "has received or will receive compensation for the
dissemination of this information." Mr. Fleming says U.S. Basketball
supplied a research report that is posted on the Wall Street West site.
He says Wall Street West is responsible for all of the other research
reports on the Web site.
"I don't think we have to say the amount [of compensation]," he says.
"We've told the SEC what we're doing and they seem fine with it."
John Stark, special counsel for Internet projects for the U.S.
Securities and Exchange Commission, declines to comment specifically on
Wall Street West. But he says the law is clear: Companies that promote
stocks have to disclose whether or not they were compensated, and the
specific amount. "It's not enough to give a vague blanket disclaimer.
You have to say exactly what you received," he says.
Mr. Fleming says Wall Street West has been compensated by all 15
companies featured on it's home page. Only two of the profiles disclose
the terms of the compensation.
Silver Star International gave Wall Street West $15,000 worth of stock
in exchange for promoting the company, which sells a variety of
products through stores on military bases. The company's stock price
more than doubled to $3 on the OTC Bulletin Board Thursday after Wall
Street West issued a press release announcing it had completed a
research report on Silver Star. Wall Street West recommends Silver Star
as an "aggressive buy" in the report. The press release doesn't
disclose that the firm received compensation from Silver Star in
exchange for producing the report.
"The phone is ringing off the hook based on the report they issued,"
Michael Faessler, president of Silver Star, said. "I've got two bottles
of champagne being iced down right now in the front office. This is an
incredible day of history for this company. For trading volume that is
20 times a previous best day, that's incredible." More than 491,000
shares of Silver Star changed hands Thursday. Silver Star is based in
Dunedin, Fla.
Mr. Fleming also created a message board on Silicon Investor to discuss
Silver Star. Roy Samuels of Hawke Group, which handles public relations
for Silver Star, says it was understood that message board exposure
would be part of Wall Street West's promotion of Silver Star.
Mr. Faessler acknowledges there could be a conflict of interest in
issuing a research report in exchange for compensation. "Obviously
there is bias. From what I have learned, bias is quite normal." Mr.
Faessler says he believes brokers often hold positions in stocks they
recommend.
Mr. Fleming says Wall Street West is not "pumping and dumping" --
driving a stock price higher through hype and then selling off shares.
He says his company is always compensated in stock, or in cash that is
then used to buy stock in the featured company. "We like to be paid in
stock, because we believe in what we do and we believe we can help
these companies. Our success is tied to their success," he says. From
time to time, he says, Wall Street West will take a "very small" profit
on stock it holds.
"We sell only for basic living expenses. We're well-financed," he says.
He says all of Wall Street West's income comes from the compensation it
receives for promoting companies.
"We like to be paid in stock, because we believe in what we do and we
believe we can help these companies. Our success is tied to their
success."
Mr. Fleming also identifies himself as the president of Diversified
Marketing Concepts, the parent company of Wall Street West. He says
Magna Advisors is a "strategic partner" of the Wall Street West site,
but says it doesn't contribute to the site's content. He declines to
name anyone who works for Magna, or to describe what the company does.
The Wall Street West site says Magna is based in San Diego. Mr. Fleming
says Wall Street West has three employees, including himself and that
Magna has three or four employees.
Mr. Fleming says Wall Street West is trying to move away from promoting
OTC Bulletin Board stocks and toward "larger, more stable" companies.
"We want to get a good reputation and have some solid companies. We'd
like to have more like InternetJet, one that went from $3.50 to the $9
to $10 range."
Jon Marple, president of InterjetNet, a Newport Beach, Calif., wireless
telecommunications company first featured on Wall Street West in April,
says Mr. Fleming approached him about promoting the stock. "They wanted
to feature us in exchange for stock. We were looking for an
introduction to the public, and it sounded like a good deal," says Mr.
Marple.
But he says he felt "uneasy" after seeing the research report Wall
Street West issued on InterjetNet, where it gave the company a "buy"
recommendation. "I felt uncomfortable about giving stock in exchange
for the recommendation," he says. InterjetNet gave Wall Street West
2,400 shares of stock in exchange for the promotion.
Mr. Marple says InterjetNet hasn't paid anyone to recommend its stock
since, and never will again. "You've got a young guy out there, this
Daryn Fleming, who is trying something a little unusual with a tricky
name," says Mr. Marple, who believed the company was involved in
financial research based on its name. "Just starting out, we were
vulnerable to an appeal like that."
Gary Schulteis, president of International Industries, says he hired
Wall Street West to get some exposure for his company, particularly
on-line.
"[Mr. Fleming] said that he is very active in the Internet, and that he
had lots of places to get us good corporate exposure," Mr. Schulteis
says. He says he never specifically asked Mr. Fleming to post on
message boards.
Mr. Fleming created a Silicon Investor message board to discuss
International Industries, a Boca Raton, Fla., company that manufactures
cigars and cigar vending machines. Mr. Fleming has posted 11 of the
board's 27 messages. When some participants complained that the stock's
price appeared to be slipping, he responded, "We think mostly big time
investors bought [International], which is why we want to do a Wall
Street West style SQUEEZE. This is where none of us will sell. In light
of increasing demand, the stock could soar!!!!"
Mr. Fleming says Wall Street West handles investor relations for Leah
Industries, a Canadian manufacturer of windows and doors that was
profiled on the Web site and received a research recommendation.
But Leah's president, Alex Nafanailov, says the company no longer has a
business relationship with Wall Street West.
"We're not happy with them and we want nothing to do with them," says
Mr. Nafanailov. He says Leah gave Wall Street West 10,000 shares last
month in exchange for promotion, but stopped working with the company a
short time later.
By JASON ANDERS
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