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.”
Richard H. Walker, the SEC’s director of enforcement, said in all cases,
the site operators misled potential investors into thinking their
recommendations were independent when the individuals were actually getting
compensated for promoting the stocks involved.
“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.