Food for thought from today's WSJ:
Trading Halt by SEC Roils
Mountain Energy Debate
By JASON ANDERS
THE WALL STREET JOURNAL INTERACTIVE EDITION
When the U.S. Securities and Exchange Commission halted trading of tiny
Mountain Energy on Wednesday, it intensified what was already one of the
most heated and controversial on-line debates.
Since being formed through a reverse merger in June, the Houston oil
company has been a hot topic on the Silicon Investor Web site's
(www.techstocks.com) discussion forums. More than 7,200 messages have been
posted about the stock, which is quoted on the OTC Bulletin Board.
The SEC ordered the trading suspended until Aug. 12, it says, because of
questions raised about some information Mountain Energy distributed about
its land holdings and the value of that land -- issues that message board
participants have been debating for weeks.
And it has been an ugly debate, says Silicon Investor.
"Dealing with this message board has been an absolute nightmare. It's the
worst I've ever seen," says a spokesman for the discussion forum. "At its
worst we were getting flooded with about 200 complaints a day. That went on
for about two weeks. It took so much time to read through them, it made it
impossible to get anything else done."
For its part, Mountain Energy concedes that some press releases may have
contained inaccurate information, but says those releases were issued by
the management of the shell company, International Casino Cruises Inc.,
into which Mountain was merger. Mountain Energy says the releases were
issued without its approval.
"Anything before June 24 was written by them, and we had nothing to do with
it," says Jack Uselton, president of Mountain Energy. "We were
flabbergasted when [the SEC] halted trading. I don't know what the hell is
going on, but I know we haven't done anything wrong." Mountain Energy has
filed a lawsuit against the management of International Casino Cruises, and
some financial firms it alleges improperly received stock from the prior
management. The defendants couldn't be reached for comment.
Mr. Uselton says he wants the company to disclose additional financial
information to investors, but says he can't do that because the former
directors haven't turned over some key data. He also says that neither he
nor anyone else affiliated with Mountain Energy has sold any stock, as some
on the message board have alleged.
The SEC declines to elaborate on its investigation into Mountain Energy,
but that hasn't stopped message board participants from weighing in with
their own theories. The stock's supporters say the SEC's investigation will
once and for all clear Mountain Energy's name. Many critics believe the
stock will never trade again.
Both sides have pointed fingers at the other, claiming stock manipulation
and citing the stock's wild ride as evidence. Shares of Mountain Energy
climbed from six cents a share at the beginning of May to $1.53 in early
June, only to fall back steadily to 18 cents a share before trading was
halted. Silicon Investor says the bulk of the complaints it received seemed
to be part of an organized campaign by some message-board participants to
expel certain "bashers" -- a person who makes derogatory posts on message
boards in an effort to drive down a stock's price.
At its height, the bickering included death threats. Silicon Investor says
a few users posted messages in public and in private hinting that harm
could come to some of Mountain Energy's critics if they didn't keep quiet.
"I don't know if the threats were legitimate, but I know we took them
seriously," says the Silicon Investor spokesman. Some Mountain Energy
supporters have suggested that some of the stock's critics authored the
threats themselves.
"A lot of things are coming to light that we've been saying for a long,
long time," says Janice Shell, one of the most active participants on the
Mountain Energy message board. "These people go on and on about the need
for due diligence or research, but their idea of due diligence is calling
up the company and believing everything handed to them."
Ms. Shell and others have been accused by other board participants of being
paid to attack the stock on behalf of "shorters" -- investors who make bets
that a stock will fall in price. She says she has never held a position in
Mountain Energy, and has no financial interest in the stock. But Mountain
Energy supporters say something just doesn't add up.
"They say they're there to save us from the pump and dumpers. However, pump
and dump time is long gone on this stock, and they're still harping on it.
There has to be a reason," says Eric Deaver, a frequent participant on the
message board.
Mr. Deaver, who says he has faith in the management of Mountain Energy,
says the so-called bashers have ruined what was a good message board -- and
a good investment. "I don't have a problem with someone raising an issue. I
think that's responsible. I have a problem with these people who do nothing
but bash the stock all day long," he says.
Mountain Energy took a shot at its on-line critics in a press release at
the beginning of the week, where it said: "It is human nature to wish for
quick returns on an investment, and this drives a need for positive
information ... . However, if the management moved quickly to give out
unproven information, they would be as guilty of irresponsibility as those
sources of misinformation, who are currently so active on the Internet."
Mr. Uselton says he questions the motives of the message board participants
who have attacked Mountain Energy. "This stuff is coming from people who
know nothing about the company. I just don't understand why they are there,
why they keep at it," he says.
Ms. Shell, who says she invests in several stocks but none quoted on the
OTC Bulletin Board, admits that she is "completely obsessed" with
unraveling what she calls "the Mountain Energy story." And, she says, the
story isn't over yet. "I'd like to believe now that this board will calm
down, and then I will depart," she says. "But I just know that as soon as
trading reopens, there are going to be a lot of posts saying 'this baby is
going to the moon.' And then I'll be back."
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Write to Jason Anders at: jason.anders@news.wsj.com
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