Further Ziasun8 Vindication-> SEC seeks $677,029 (U.S.) from Eiten
SEC seeks $677,029 (U.S.) from Eiten
2014-01-16 13:22 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-CPOW) Clean Power Concepts Inc
Also Street Wire (U-EDVP) Endeavor Power Corp
Also Street Wire (U-GSTP) Gold Standard Mining Corp
Also Street Wire (U-NXWI) Nexaira Wireless Inc
by Mike Caswell
The U.S. Securities and Exchange Commission has filed a motion seeking at least $677,029 in penalties for Geoffrey Eiten, a Boston stock tout who claimed to be "America's Leading Micro-Cap Stock Picker." (All figures are in U.S. dollars.) The SEC says that Mr. Eiten made false and misleading projections in a series of 2010 tout sheets. Among them were claims that a Vancouver company had developed the "fastest router in the world."
The penalty request is contained in a motion that the SEC filed on Tuesday, Jan. 14. The SEC claims that during the touting, Mr. Eiten failed to disclose $605,262 in payments that he received from third parties. The regulator is seeking disgorgement of that amount, plus interest, for a total of $677,029. The regulator is also asking that the judge impose an appropriate civil penalty, but has not specified an amount.
The determination of Mr. Eiten's fine is the final matter in the two-year-old case, Mr. Eiten having previously settled out of court. On Dec. 18, 2013, he agreed to an order that bars him from participating in penny stock offerings and from receiving any compensation from promoting penny stocks. He did not admit to any wrongdoing in settling the case. As part of that settlement, he agreed to monetary penalties that the judge must determine.
Assuming the SEC succeeds in obtaining a fine for Mr. Eiten, it would be the second penalty to arise from the case. The regulator previously secured a $1.6-million default judgment against Mr. Eiten's company, National Financial Communications Corp. The amount represented disgorgement of $605,262 in profits plus a $1-million civil penalty.
"Crap-shooting" stocks
The allegations against Mr. Eiten, as detailed in a civil complaint the SEC filed on Dec. 12, 2011, stem from a scheme he ran in 2010 from Massachusetts. The SEC claims that he created a series of false and misleading tout sheets under the name OTC Special Situations Report. He sent out the sheets through mass mailings or spam e-mails, according to the complaint.
The information he provided to potential investors was simply a repetition of material that third parties had provided him, the SEC said. He knew nothing about those third parties, including their names, according to the SEC. In fact, he generally considered the companies he was touting to be "crap-shooting stocks" that would be out of business within a year or two if they did not obtain adequate financing, the complaint stated.
Among the stocks he touted was Vancouver-based Nexaira Wireless Corp. According to the complaint, he told potential investors that the company had developed the fastest router in the world and was receiving revenue from Sprint and Comcast. In reality, the company's router had not received approval from the Federal Communications Commission, and the company had no relationships with Sprint or Comcast, the complaint stated.
Another Canadian listing that Mr. Eiten touted was Clean Power Concepts Inc. of Regina, Sask., according to the complaint. He allegedly told readers that the company, which made fuel additives, had positive cash flow and was making money. In reality, it was only cash flow positive because of financings, the SEC said. The other two stocks the complaint listed were Gold Standard Mining Corp. of California and Endeavor Power Corp. of Massachusetts.
In writing his reports, Mr. Eiten failed to fully disclose his substantial compensation, according to the SEC. With Gold Standard, his report disclosed a $25,000 payment, but the SEC claimed he received wires far in excess of that amount from two offshore entities. With Nexaira, Mr. Eiten only listed a $16,000 payment, but the SEC claims he received substantially more from a company called Norbaoten Invest Ltd.
The complaint sought an order prohibiting Mr. Eiten from promoting penny stocks, disgorgement of ill-gotten gains and an appropriate civil penalty.
While the case marked the first time the SEC filed charges against Mr. Eiten, the regulator mentioned his OTC Special Situations Report in at least one prior suit. In its March, 2009, case against Vancouver's Joseph Fernando and others, the SEC claimed that Mr. Fernando paid for coverage in the OTC Special Situations Report for Xpention Genetics Inc., a company that was purportedly developing a cancer vaccine. The SEC said the report contained several false or misleading claims about the company. The regulator ultimately obtained $2.87-million default judgment against Mr. Fernando.
Clean Power has also appeared in another more recent regulatory action. On Nov. 26, 2013, the B.C. Securities Commission claimed that Alnoor Ramji, a former B.C. resident, participated in a scheme to sell $21.5-million worth of stock in the company. During a one-month promotion that began in December, 2010, he and other unidentified associates sold 81 million shares while the company issued a number of promotional news releases, the BCSC said. Mr. Ramji has not responded to that case. |
