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Non-Tech : Franklin, Andrews, Kramer & Edelstein -- Ignore unavailable to you. Want to Upgrade?

To: scion who wrote (1672)	7/5/2012 9:02:19 AM
From: scion	Read Replies (1) \| Respond to of 12881

SEC's "stock picking robot" targets deny wrongdoing 2012-07-04 13:44 ET - Street Wire Also Street Wire (U-SEC) U.S. Securities and Exchange Commission Also Street Wire (U-HENC) Holloman Energy Corp Also Street Wire (U-UOMO) UOMO Media Inc by Mike Caswell stockwatch.comSEC-1974611&symbol=SEC&news_region=C Thomas and Alexander Hunter, the U.K. twins facing civil fraud charges from the U.S. Securities and Exchange Commission over a market manipulation scheme they set up at the age of 16, deny that they did anything wrong. In an answer filed on June 27, 2012, the brothers say any representations they made about stocks were mere "puffery" that included adequate disclaimers. The charges the brothers face stem from a "stock picking robot" they claimed could identify penny stocks that would rise in value. They received $1.2-million selling an electronic newsletter called doublingstocks.com that was based on the purported robot, the SEC said. (All figures are in U.S. dollars.) The stocks in the newsletter included Vancouver-linked OTC Bulletin Board listing Holloman Energy Corp. and Toronto-based OTC-BB listing UOMO Media Inc. (Neither company was accused of any wrongdoing.) The brothers, for their part, claim that they did nothing wrong. In a sparse answer filed on Wednesday, June 27, they say the SEC has not shown any material misstatement or omission on their part. Although the answer is 10 pages long, it contains few other details. In response to most of the 63 paragraphs of the SEC's complaint, the brothers simply deny any wrongdoing. They ask for a trial by jury. New York lawyers Eric Bruce, Francisco Navarro and Josef Klazen of Kobre & Kim LLP filed the answer on behalf of the brothers. SEC's complaint Full details of the charges against the 22-year-old brothers are contained in a civil complaint the SEC filed in the Southern District of New York on April 20, 2012. The complaint described how the brothers ran a newsletter in 2007 and 2008, when they were 16 years old, that relied on a "stock picking robot" that they called "Marl." They said that Marl had been developed by Michael Cohen, a contractor who created a computer stock trading model for Goldman Sachs. Marl, however, was a complete fiction, the SEC said. There was no technical analysis behind the stocks and there was nobody named Michael Cohen who had ever worked for Goldman Sachs. In fact, software that some subscribers received was programmed to select stock picks from a database that Thomas Hunter maintained, the complaint stated. Despite that, the newsletter attracted 75,000 subscribers in the U.S., who paid $1.2-million in fees. Unbeknownst to those subscribers, the source of at least some of the stock picks was a separate service the brothers operated called equitypromoter.com that catered to stock promoters. With that service, the brothers would insert stocks into the Marl system for a fee. According to the complaint, the equitypromoter.com site advertised the ability to "rocket" the price of thinly traded penny stock issuers. In all, promoters paid $1.8-million to have Marl pick their stocks, the SEC claimed. According to the complaint, the stocks listed in the newsletters frequently rose significantly after the picks went out. In most cases, they also quickly corrected downward, leaving investors with shares worth far less than their original value. The stock with the largest gain was Toronto's UOMO Media, which went to $1.06 from 35 cents after Marl supposedly picked it. Its volume went to 20.3 million shares, from 86,000. (Within days the stock had fallen to 33 cents, and it was last at 0.4 cent.) Another example listed in the complaint was Holloman Energy, which had an office in Calgary and a contact number in Vancouver. On Nov. 6, 2007, the newsletter listed the company as a pick. The stock went to $1.04 from 94 cents on substantially higher volume of 716,900 shares. (By Nov. 13 the stock had fallen to 70 cents, and it was last at 29 cents.) The complaint sought disgorgement of profits and appropriate civil penalties. In addition to the brothers, the suit named as a relief defendant a Panamanian company, Regent Investment Group Corp. stockwatch.comSEC-1974611&symbol=*SEC&news_region=C