SEC Charges 44 Internet Stock Promoters
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The Securities and Exchange Commission Wednesday filed charges against 44 individuals the agency alleges issued fraudulent and misleading information about small, unknown companies over the Internet.
The SEC said the individuals transmitted fraudulent information either through e-mail, in stock message boards or by publishing their own Web sites. Some of the Internet sites and operators include: The Future Superstock, Jeffrey C. Bruss; Stockstowatch, Steven A. King; Princeton Research Inc., John Wesley Savage; Investors Edge, Francis A. Tribble.
The SEC says those charged either lied about the companies promoted, misled investors that the publications were truly independent or failed to disclose the nature, source and amount of compensation they were paid to promote a company's stock.
Those charged received more than $6.3 million and 2 million shares of discounted stock in the companies they promoted. In some instances, the individuals sold their stock or exercised their options immediately after a recommendation was issued, a deceptive practice commonly known as "scalping."
"Not only did they lie about their own independence, some of them lied about the companies they featured, then took advantage of any quick spike in price to sell their shares for a fast and easy profit. Today's sweep demonstrates the SEC's commitment to cleaning up the Internet, by aggressively prosecuting securities violations occurring in cyberspace," Walker said.
To help investors steer clear of fraudulent activities, the SEC has set up a special Web site.