Off topic: Ring a bell??
NEWS STORY FOR I/SCR 2021
11:54 SEC/Internet Fraud-2: Allege Stock Touts Didn't Disclose Pay : I/SCR G/SEC N/DJN N/DJWI N/NET N/STK M/FIN P/DIS R/NME R/US
By Judith Burns
WASHINGTON (Dow Jones)--In its first coordinated strike against Internet stock
fraud, the Securities and Exchange Commission announced Wednesday it has filed
23 cases against 44 individuals and companies, alleging online fraud.
"People say it's impossible to police the Internet," said Richard Walker,
director of the SEC's enforcement division. "We think they're wrong."
At a press conference at the SEC, Walker announced the agency's first-ever,
nationwide crackdown on fraudulent online newsletters, message board postings,
web sites, and "spams," or online junk mail.
In the 23 cases, the SEC alleged individuals and companies violated federal
antifraud and antitouting provisions by pitching stocks without disclosing that
they received compensation - either in cash, stock or stock options - to make
the pitch.
The SEC also alleged that defendants lied about the companies they touted and
about their relationships to the companies. While many claimed to be
independent, "we allege that they were bought and paid for" by the companies
whose shares they recommended, said Walker.
Altogether, the SEC estimates that $6.2 million of cash, and 1.8 million
shares of stock and options in more than 235 microcap companies were exchanged
in the 23 cases.
In some instances, the SEC also alleges that online promoters sold their stock
or exercised their options immediately after recommending the company, a
practice known as "scalping."
The extent of investors' losses due to scalping in these cases isn't known,
said Walker. But, he stressed that online fraud is on the rise, and cautioned
investors to be wary of any stock pitch made on the Internet.
"This is a problem that we believe is prevalent and persistent," said Walker.
Underscoring that, the SEC's sweep pulled in a Chicago-based Internet
newsletter, called the Future Superstock, a Florida-based Internet stock
service, called StockstoWatch, and a California Internet stock touter who
created his own web site dubbed the "Investors Edge. 11:54 AM- - 11 54 AM EST 10-28-98
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