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Thursday January 8 12:17 PM EST
SEC says stock promoter got paid for Internet picks
By Joanne Morrison
WASHINGTON (Reuters) - An Orlando, Fla., man has been sued by federal
regulators accusing him of touting certain stocks to investors through
his magazine and over the Internet without disclosing he was getting
paid to promote the stocks.
In its Jan. 5 civil complaint filed in U.S. District Court in Orlando
and made available to Reuters Wednesday, the Securities and Exchange
Commission accused Steven Samblis of passing himself off as an
independent and impartial stock picker when he was "nothing more than a
paid pitch man" for the companies he hyped.
In its complaint, the SEC alleged that in October 1997,Samblis published
a magazine called "New Stock" in which he "enthusiastically recommended"
certain stocks without disclosing that he had been paid at least $20,000
from those companies to make the recommendations.
Further, the agency alleged that Samblis, as part of the financial
arrangement, also agreed to issue thousands of e-mails over the Internet
pitching these same securities.
In its complaint, the SEC alleged Samblis and his company, New Stock
Inc., had agreements with some of the companies whose shares had been
featured in the magazine and in e-mails. Samblis agreed to promote the
shares and feature them in the magazine in exchange for compensation,
according to the SEC.
While receiving compensation for certain stocks highlighted in his
magazine is not a violation of federal securities laws, not disclosing
that financial arrangement is a violation, an SEC official said.
"There is obviously a danger for investors when what they believe is
impartial investment advice in fact has been bought and paid for," David
Nelson, the SEC attorney handling the case, said.
"You can't tout stocks in which you have an interest without disclosing
that interest," Nelson said.
Samblis' attorney, Norman Hull, said his client denies the SEC's
allegations.
"He denies the allegations, but quite frankly we are going to be sitting
down and talking with the SEC hopefully very soon," Hull said. "We
expect anything which goes on between us hopefully will remedy the
problem for both of us."
(Reuters/Wired) ^REUTERS@ |
