Here it is!
We even made honorable mention!
11/08 14:32-DJ: SEC Issues First Internet Stock-Manipulation Lawsuit
WASHINGTON -(Dow Jones)- The Securities and Exchange Commission brought suit
Thursday against several firms and individuals in its first ever case of market
manipulation of a publicly traded stock using the Internet.
Citing the speed and efficiency the new medium can lend the dissemination of
information, and more importantly misinformation, an attorney at the SEC said
the case, involving Systems of Excellence Inc., represents the commission's
newly intensified vigilance for stock promotion schemes involving the Internet.
The suit alleges a massive and ongoing market manipulation in the stock of
Systems of Excellence, a Coral Gables, Fla., maker of video-conferencing
equipment. Between March 1995 and July 1996, according to the SEC, Systems Of
Excellence's chairman and chief executive, Charles Huttoe, distributed
unregistered shares of the company to accounts controlled by him and to
principals at SGA Goldstar Research Inc., a market research company which
publishes an electronic tout sheet distributed over the Internet.
In return for the shares, SGA employees Theodore Melcher and Shannon Terry
agreed to include Systems of Excellence in their electronic newsletter, SGA
Whisper Stock Report. The newsletter is disseminated electronically via a World
Wide Web site, as well as by fax and quote machines, to over 700 paid
subscribers. The complaint charges the newsletter continually urged its readers
to buy and hold Systems of Excellence stock, backed up by what the SEC says was
false and misleading information.
Huttoe also hyped the company through misleading press releases about the
company's success in the video teleconferencing business, the SEC said.
Stock-market regulators are increasingly worried that dangers are lurking
for investors in Internet and on-line stock-talk forums.
Such sites are the newest, hottest medium for discussing, dissecting - and
sometimes hyping - companies, especially the smallest stocks found on the
Nasdaq Stock Market, Nasdaq's OTC Bulletin Board or in the Pink Sheets put out
by the National Quotation Bureau.
America Online's Motley Fool, one of the most widely known and popular
forums, has an estimated 250,000 households reading its site each month.
Silicon Investor, a popular Internet site, has 30,000 daily visitors posting
60,000 messages a month. And countless messages litter stock-specific web sites
and so-called newsgroups.
One of the biggest problems is that what appears to be enthusiastic chatter
may instead be orchestrated hype or outright fraud. But because people can use
pseudonyms in many areas on-line, regulators can't immediately tell if the
source of the chatter is an insider, a broker, promoter or an ordinary
investor. That makes it tough for the National Association of Securities
Dealers to police fraud or false advertising by brokers or Nasdaq companies
under its jurisdiction, and for the Securities and Exchange Commission or the
states to police fraud or unregistered securities over the Internet.
Copyright (c) 1996 Dow Jones & Company, Inc.
All Rights Reserved.
Symbol(s): SEXI |
