Re: SEC v. Attalienti; SEC v. Carlisle; SEC vs. The Future Superstock
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission v. John D. Attalienti and
Barrow Street Research, Inc., Civil Action No.98-CIV 7660 (DAB)
(Oct.27, 1998 S.D.N.Y.)
Litigation Release No. 15957 / October 27, 1998
SEC OBTAINS $25,000 PENALTY AND PERMANENT INJUNCTION AGAINST JOHN
D. ATTALIENTI AND BARROW STREET RESEARCH, INC. FOR FAILING TO
DISCLOSE ADEQUATELY PAYMENTS FROM ISSUERS FOR TOUTING STOCKS
The Securities and Exchange Commission (SEC) announced that
on October 27, 1998 it filed a civil action in federal district
court against John D. Attalienti ("Attalienti") and Barrow Street
Research, Inc. ("Barrow Street") alleging that Barrow Street, a
newsletter advertising itself as an independent, impartial stock
analyst, failed to disclose fully that it routinely received
payments of cash and securities from issuers in exchange for
touting the issuers' stocks on Barrow Street's Internet web site.
Attalienti and Barrow Street promoted the stock of 10 different
publicly-traded companies on Barrow Street's Internet web site
without fully disclosing the nature, terms and amounts of
compensation received from the advertised companies, in violation
of Section 17(b) of the Securities Act of 1933 ("Securities
Act"). The SEC also alleges that Attalienti and Barrow Street
distributed the Barrow Street recommendations to a network of
broker-dealers without full disclosure of the compensation
received from the issuers.
Without admitting or denying the allegations in the
Complaint, Attalienti and Barrow Street have consented to the
entry of Final Judgments (i) permanently enjoining them from
violating Section 17(b) of the Securities Act and (ii) ordering
Attalienti to pay a penalty of $25,000.
Section 17(b) of the Securities Act makes it illegal for any
person to distribute a publication recommending a security
without fully disclosing the nature, terms and amounts of
compensation received or to be received in connection with the
distribution of the publication.
Investors are advised to read the SEC's "Cyberspace" Alert
before purchasing any investment promoted on the Internet. The
free publication, which alerts investors to the telltale signs of
online investment fraud, is available on the Investor Assistance
and Complaints link of the SEC's Home Page on the World Wide Web
<www.sec.gov>. It can also be obtained by calling 800-SEC-0330.
Investors are encouraged to report suspicious Internet offerings
(or other suspicious offerings) via e-mail to
<enforcement@SEC.gov>. A user-friendly form to assist you in
making a report is available at the Enforcement Complaint Center
on the Enforcement Division link of the SEC Home Page
<www.sec.gov>. Investors can also mail a report to the SEC
Enforcement Complaint Center, Mail Stop 8-4, 450 Fifth Street,
Washington, D.C. 20549.
=====
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 15949/October 27, 1998
SECURITIES AND EXCHANGE COMMISSION v. ANITA CARLISLE d/b/a
CARLISLE COMMUNICATIONS, J. SCOTT SITRA, SITRA ENTERPRISES,
INC.,JAFLC CAPITAL MANAGEMENT and JEFFREY BROMMER d/b/a
INVESTMENTS 101 Ltd. ET AL. Civil Action No. W98CA352(W.D.
Tx. Waco Division)
SEC CHARGES INTERNET STOCK TOUTERS WITH SECURITIES FRAUD
The Securities and Exchange Commission (Commission)
announced today that it filed a Complaint in the United
States District Court in Waco, Texas, against Anita
Carlisle d/b/a Carlisle Communications (Carlisle),
Scott Sitra (Sitra), Sitra Enterprises, Inc. (Sitra
Enterprises), JAFLC Capital Management Ltd. (JAFLC) and
Jeffrey Brommer d/b/a Investments 101 Ltd. (Brommer)
(collectively, the defendants). Carlisle and Sitra run
self-described investor relations services from their
homes. Brommer is an investment adviser registered
with the Commission. The Commission's Complaint
charges the defendants with illegally "touting" and
"scalping" securities in violation of the federal
securities laws.
In particular, the Complaint alleges the following:
- Carlisle, Sitra, Sitra Enterprises, JAFLC and Brommer
each had an agreement with Great White Marine and
Recreation, Inc. ("Great White" or "the company"), a
company whose stock is quoted on the OTC Bulletin Board
Service, to provide "investor relations" and other
promotional services. Under these agreements, each
defendant published and circulated favorable promotional
information about Great White in exchange for Great White
stock and/or money.
- From approximately February 1998 through September 1998,
all three defendants prepared reports and news releases
that spoke glowingly about Great White and encouraged
investors to purchase the company's stock, without
disclosing their compensation arrangement with Great
White.
- The defendants published this information on the Internet
and in newsletters and circulated it in glossy folders
sent to investors who responded to telephone numbers
listed on the company's Internet website or in
promotional materials.
- All three defendants also took advantage of the market
interest their promotional efforts created by selling
Great White stock into the market contrary to their
recommendations to buy the same stock. This fraudulent
practice is known as scalping. Carlisle, Sitra and
Brommer received stock proceeds totaling approximately
$573,896, $66,416 and $42,650, respectively.
- Carlisle shared her proceeds with Great White and also
deposited shares in Canadian brokerage accounts.
- Each defendant failed to disclose their receipt of stock
from Great White and their intention to sell the stock
contrary to their buy recommendations/favorable press
releases.
The Complaint charges that the defendants' practice of
scalping violates the antifraud provisions found in Section
17(a) of the Securities Act of 1933 (Securities Act) and
Section 10(b) of the Securities and Exchange Act of 1934,
and Rule 10b-5 thereunder. The Complaint also charges
Brommer with antifraud violations found in Sections 206(1)
and 206(2) of the Investment Advisers Act of 1940, based
upon these same activities. Finally, the Complaint also
charges that each defendant violated the anti-touting
provisions contained in Section 17(b) of the Securities Act.
The Complaint seeks a permanent injunction against each
defendant, as well as an accounting, disgorgement and civil
penalties.
=====
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15958 / October 27, 1998
S.E.C. v. The Future Superstock, Inc. and Jeffrey C. Bruss,
Docket No. 98C6772 (U.S.D.C., N.D.Ill.)
The Securities and Exchange Commission announced the
filing of a Complaint in the United States District Court
for the Northern District of Illinois, on October 27, 1998,
seeking a permanent injunction, disgorgement, civil
penalties and other relief against The Future Superstock,
Inc. ("FSS") and Jeffrey C. Bruss.
The Complaint alleges that since the spring of 1996, an
Internet newsletter called The Future Superstock, which is
published by FSS and researched and written by Bruss, has
recommended to the newsletter's more than 100,000
subscribers and to visitors to the newsletter's web site
(www.futuresuperstock..com) the purchase of approximately 25
microcap stocks which were predicted to double or triple in
the next three to twelve months. In most instances, the
prices of recommended securities increased for a short
period of time after a recommendation was made in The Future
Superstock, after which the prices of those stocks dropped
substantially. It is alleged that in making these
recommendations FSS and Bruss have violated the federal
securities laws by failing to provide adequate disclosure in
a number of significant areas: (1) for over two years
neither the newsletter nor the web site disclosed that Bruss
or FSS received compensation, in cash and stock, from nearly
every issuer profiled; (2) FSS and Bruss have failed to
disclose that in many instances they have sold stock in the
issuer shortly after the dissemination of a recommendation
in The Future Superstock caused its price to rise; (3) FSS
and Bruss have represented in the profiles that they
performed independent research and analysis in evaluating
the issuers profiled by the newsletter when, in fact,
little, if any, research was conducted in preparing the
profiles; and (4) the statements made in the profiles
regarding the success of past stock picks made in The Future
Superstock have been false and misleading.
It is alleged that by engaging in such conduct FSS and
Bruss have violated Sections 17(a) and 17(b) of the
Securities Act of 1933 and Section 10(b) of the Securities
Act of 1934 and Rule 10b-5 thereunder.
|
