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Cat Litter Company Pet Ecology Brands Sending Junk Faxes
The $1M Fax: Do Stock Promotions For Art4Love, Pet Ecology, Wall
Street Securities, Mellon Research Fit SEC 'Risk Based' Profile? / FinancialWire=AE March 4, 2005 (FinancialWire) Are stock promotions for Art4Love (OTC: ALVI) Pet Ecology Brands (OTC: PECB), Wall Street Securities (OTC: WLSC) or Mellon Research (OTC: MLON) similar to those that have resulted in recent U.S. Securities Exchange Commission trading halts? The SEC has recently initiated a new and aggressive campaign to foil what it calls suspected pump and dump promoters by suspending trading in the equities of companies that either participate in or have been targeted by suspicious promotions. Some observers believe such a "cooling off period" could "cool the ardor" for suspect promotions if investors have an opportunity to further evaluate junk faxes and spam emails they have received, and could prevent some more na=EFve investors from putting their money into stocks that are the subject of large-scale promotion campaigns based on questionable substance or fundamentals. According to an article by Deborah Solomon of the Dow Jones (NYSE: DJ) Wall Street Journal, published February 2, 2005, "the SEC's move is part of the agency's broader attempt to get ahead of possible fraud before it becomes widespread." The article is at: http://online.wsj.com/search#S=ADB110729717180142868 The SEC has apparently developed a "profile" to determine candidates for potential trading halts. Solomon said the agency has implemented a "risk based" approach to help identify potential problems, and last year took the unusual step of halting trading in the securities of 26 "shell" companies that failed to file timely financial disclosures with the agency. The SEC recently temporarily suspended trading in Commanche Properties (OTC: CMCH) and Courtside Products (OTC: CSDP), both of which disclaimed any company or executive association with the spam email and/or faxes that triggered the SEC suspensions. In the case of Courtside, the SEC said it is investigating whether Courtside was misled by stock promoters who advised the firm to go public by relying on an SEC rule that allows companies to issue shares and raise money without registering with the commission, if certain conditions are met. The conditions include issuing a portion of the shares to "accredited" investors. "Federal securities laws define an accredited investor as certain entities or individuals, such as banks, insurance companies, registered investment companies or trusts," said the Wall Street Journal. "The SEC is looking into whether the stock promoters, who agency officials declined to identify, may have falsely portrayed themselves as accredited investors in order to gain shares of Courtside. The promoters may have then sought to sell their shares to investors and later drive up the price through spam e-mail and faxes. Investigators want to determine whether the ultimate goal was to artificially stimulate demand for the stock and then dump shares once the price increased. "The agency is expected to suspend trading in several other companies within the coming weeks and months, according to people familiar with the matter. "At issue is the potential for so-called pump-and-dump schemes, whereby speculative investors, company insiders or others try to inflate demand for a stock by trumpeting positive-sounding information about a company -- typically via e-mail -- and then cash in their shares at the higher price. Often the information is false and the stock quickly declines again," explained the Journal. The SEC said that each week, the SEC's internet enforcement division, headed by John Reed Stark, gets thousands of complaints from investors "about spam email plugging stocks and other investments." "We want to head off possible damage to shareholders before it occurs," John Reed Stark, chief of the SEC's office of Internet enforcement, was quoted as saying. Investigators want to determine whether the ultimate goal in many of these instances is to "artificially stimulate demand for the stock and then dump shares once the price increased." The SEC hastened to add that it is not asserting that many of the companies themselves are involved in the schemes. Often they are just bystanders, but sometimes it results from stock issued to offshore and even "promotional" sites and email and fax originators to create "visibility," and the promoters often violate their promises to the companies to sit on the shares. "Under certain circumstances, an improper stock distribution in violation of SEC regulations can be a prelude to a manipulation," Peter Bresnan, an associate director in the SEC's enforcement division, was quoted as saying. Investrend Information's (http://www.investrendinformati=ADon.com) Investors Resource Center has teamed with JunkFax (http://www.junkfax.org), which allows those receiving unwanted stock promotions to provide the evidence directly to FinancialWire. Most but not all have missing or incomplete disclosures under U.S. Securities and Exchange Commission Regulation 17(b): "It shall be unlawful for any person, by the use of any means or instruments of transportation or communication in interstate commerce or by the use of the mails, to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof." "The SEC has told FinancialWire) that Regulation 17(b) means full and complete compensation for research and any other services provided, including amounts and sources, must be disclosed in 'every press release' as well as other published documents, including emails or faxes. The SEC states that third party compensations must include the relationship of the payer to the issuer. "In an email to FinancialWire, John J. Nester, a spokesperson for the U=2ES. Securities and Exchange Commission, confirmed that regulators interpret 17(b) to mean that specific compensation information must be contained in all such communications to the public, and that a link to a disclosure somewhere else, for example, is a violation of the regulation. He further stated that the compensation disclosure required by the SEC includes "amounts and sources" in any and all communications mentioning the company. Hot Stock Alert!!!, a fax broadcast by The Corporate & Investor Relations Group, touted Wall Street Securities and Mellon Research for an undisclosed number of shares of MLON from an undisclosed and unnamed "third party investor of MLON." Stocks to Watch set a 5-day target of $2 on Pet Ecology. Four days later it was dropping 47.50% to $0.42. Stocks to Watch said it was compensated ONE MILLION shares of PECB from an unnamed "third party," worth in the neighborhood of $1 million for a fax distribution before 3,169,569 shares traded Thursday, dropping the bottom out of the stock. Stocks to Watch did warn that it could sell its shares at any time. Wall Street News touted Art4Love, with a "potential target" of $4.50, in return for $41,620 paid by an undisclosed "third party." The publication did disclose that the "third party" might buy or sell "at any time." For up-to-the-minute news, features and links click on http://www.financialwire.net FinancialWire is an independent, proprietary news service of Investrend Information, a division of Investrend Communications, Inc. It is not a press release service and receives no compensation for its news or opinions. Other divisions of Investrend, however, provide shareholder empowerment platforms such as forums, independent research and webcasting. For more information or to receive the FirstAlert daily summary of news, commentary, research reports, webcasts, events and conference calls, click on http://www.investrend.com/cont=ADact.asp The FinancialWire NewsFeed is now available in multiple formats to your site or desktop, free. Click on: |
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