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Is This April 1? SEC Just Nailed The Dumbest Stock Manipulator Of All Time.

Posted by AGORACOM at 6:42 PM on Thursday, October 22nd, 2009

Image Courtesy Of

Image Courtesy Of

Unless this is April 1st, grab a beverage and then sit back to enjoy the story of Lambros Ballas, a registered representative of New York stock brokerage firm Global Arena Capital Corporation, who just got nailed by the SEC for what I can only call the dumbest stock manipulation of all time.

Like many stock manipulators, he used stock discussion forums to point to fake press releases that he had created.  That is where similarities to other stock manipulators ends.  Why?  Stock manipulators typically pump press releases about deals between unknown micro-cap companies (ACME Ammo signs $100,000,000 Purchase Agreement With Wiley Coyote) that are nearly impossible to verify and always manage to attract some suckers.

Nope, good old Lambros swung for the fences by including the likes of Microsoft , Google, IMAX and Disney!  No joke.  His schemes were hugely successful for about 7 minutes until they started showing up on StockTwits Desktop and a million other monitoring services.  Clearly, Lambros is clueless about the real-time web.

Here are the excerpts.  You just can’t make this stuff up.  The best pump was the last one.

* Ballas issued a phony press release the evening of Sept. 29, 2009, announcing that Pennsylvania biotech company Discovery Laboratories had obtained approval from the U.S. Food and Drug Administration for a drug under development. Ballas then posted a message on a stock message board with a link to what he described as the company’s “official press release.” In his post, Ballas claimed to have called his “personal broker” who “says it’s been confirmed.” The next morning, Discovery Laboratories shares opened significantly higher.

* The next day, Ballas issued another press release falsely claiming that IMAX Corporation had been acquired by Disney. Once again, he followed up by posting links to the phony release on a stock message board, telling other potential investors that he had bought 10,000 IMAX shares and that his broker “just called me to tell me at the crack of dawn.

* Ballas continued his scheme on October 1, issuing a phony press release stating that California search engine company was being acquired by Microsoft. Ballas again followed up by posting messages and links to the release on stock message boards. In one posting he stated: “Local just bought out by Microsoft, at $12.50 per share including patent ownership.” In after-market trading,’s stock price rose nearly 80 percent.

* Later that night, issued a corrective release saying that the Microsoft release had been false — there was no Microsoft acquisition. Undeterred (Gotta love this guy), the next day Ballas issued another phony release, this time stating that it was Google, and not Microsoft, that was acquiring the company.

Anybody disagree that Lambros is clearly the dumbest stock manipulator of all time?

And before I hear any Greek jokes, remember that we still have Harry Markopolos to more than make up for Lambros.


Inside Trading Stupidity Is Not Limited To Penny Stocks Folks

Posted by AGORACOM at 1:38 PM on Sunday, October 18th, 2009
Photo Via Bloomberg.  Click For Article

Photo Via Bloomberg. Click For Article

When will they learn, when will they learn, when will they learn??  Perhaps, if I repeat myself, it will sink in, so here it goes:

You’re an idiot if you think you can get away with insider trading. Your crime provides a complete digital footprint for authorities to follow.

It’s Sunday morning and I’m getting ready to go out with the family.  I’ll give you the first paragraph and then you can read the entire article.

Oct. 16 (Bloomberg) — Raj Rajaratnam, the billionaire founder of Galleon Group,
and former directors at a Bear Stearns Cos. hedge fund were among six people charged
in a $20 million insider trading scheme that federal prosecutors called the biggest ever
involving hedge funds.

$20 Million  ….. as you’re reading, just remember that the biggest crooks in the financial markets reside on Wall Street, not in penny stocks.  Until Wall Street CEO’s Go To Jail And Pay Back Their Billions In Bonuses, mass faith in the markets will not be restored.

UPDATE:  Looks like an IR firm is at the center of this insider trading scheme as either the firm, or an employee (code name “Google Source“) was requesting $150,000 per quarter in order to provide insider information on Google.  Google Source‘s mistake was its marketing plan.  Selling inside information 1:1 is too slow … should have created a PPC program on Google to attract a huge number of clients. That would have attracted a whole lot less attention.


SEC Sues Over Alleged $1.7M Pump and Dump of China Energy Savings Technology

Posted by AGORACOM at 8:52 AM on Wednesday, October 7th, 2009

In the interests of maintaining balance about my bullish views on Chinese small and mid cap stocks, the Securities and Exchange Commission filed suit against Jason Genet in a New York federal court alleging that he “pumped and dumped” the stock of China Energy Savings Technology for a profit of $1.7 million. China Energy completed a reverse merger in 2004.

Moral of the story.  I love China and you can love China too – but make sure to do your due diligence each and every time you look at a new possible investment.


Perot Insider Trader Would Have Been Better Off Robbing Investors With A Helicopter

Posted by AGORACOM at 9:35 AM on Thursday, September 24th, 2009
Photo Via BBC - Click For Story

Photo Via BBC - Click For Story

When will people learn that you can’t get away with insider trading?  ESPECIALLY when you make $8.6 Million via call options! The paper trail you leave is so rock solid that you are basically hoping nobody notices that you just made a one-time bundle of cash.

I don’t care how tempting the situation is, you’re better off flying in a helicopter to raid a cash depot. I’ve heard it works.

UPDATE: Apparently, Henry Blodget agrees with us .. “It’s the most easily detectable crime in the world”. He didn’t go as far as advocating using a helicopter to rob a cash depot – but I’m sure he would if he read this post.


Felony Criminal Charges For Operator, Matthew Brown, In Penny Stock Scheme

Posted by AGORACOM at 10:55 AM on Thursday, May 21st, 2009 operater Matthew Brown and 7 other participants were charged by the SEC for their involvement in manipulative trading schemes often timed the  to coincide with false or misleading press releases issued by companies to hype their stock. The four companies were GH3 International, Inc., Asia Global Holdings, Inc., Playstar Corp., and Xtreme Motorsports of California, Inc.

In addition, the U.S. Attorney’s Office for the District of Delaware also announced felony criminal charges against 6 members of the group, including Matthew Brown.


Further details about participants and charges are outlined below – but the big question for AGORACOM is whether members of were taken advantage of in these schemes?  We know from the SEC’s press release that:

“In the scheme involving Asia Global stock, the SEC alleges that Dynkowski
personally saw to it that the manipulative trading was coordinated with misleading
press releases from the company, and in some instances he wrote the press releases
for Asia Global himself. According to the SEC’s complaint, Dynkowski instructed
Brown on Aug. 24, 2006, to have Asia Global issue a press release hyping the
company’s second quarter 2006 financial results and to “make it sound ENORMOUS.”

Given the fact Brown operates a very popular penny stock site that provides “free” stock alerts and also features sponsored penny stock press releases on its front page, it isn’t a stretch to assume that his very own members may have been victims of these manipulative trading and press release schemes. We’ll look deeper into the SEC complaint for any details.


The SEC’s complaint, filed in federal district court in Delaware, charges seven others in addition to Brown:

* Pawel Dynkowski of Newark, Del.

* Jacob Canceli of Mission Viejo, Calif., who is a stock promoter.

* Gerard J. D’Amaro of Pompano Beach, Fla., who is a stock promoter.

* Joseph Mangiapane Jr. of Laguna Niguel, Calif, who was a registered representative at AIS Financial, Inc and is currently CEO of Rubicon Financial, Inc., which owned AIS Financial, Inc. during the relevant time period.

* Nathan M. Michaud of Boston, Mass., who is a web site designer.

* Marc J. Riviello of Redwood City, Calif., who was a registered representative at AIS Financial, Inc.

* Adam S. Rosengard of Voorhees, N.J., who was a student at the University of Delaware during the relevant time period.

PARTICIPANTS CHARGED BY THE U.S. Attorney’s Office for the District of Delaware

The U.S. Attorney’s Office for the District of Delaware also today announced felony criminal charges against Dynkowski, Brown, Canceli, D’Amaro, Mangiapane, and Riviello.  Michaud the web designer and Rosengard the student were not charged.


Once again, we thank the SEC for aggressively going after penny stock fraudsters.  They are a scourge on an industry that is full of hard working and real small-cap companies that are trying to become tomorrow’s leaders.

Unfortunately, the pump and dump schemes often overshadow the efforts of real small-cap companies and often serve to set the identity of the space amongst investors.  The faster we get rid of them, the faster we can allow real small-cap companies to win or lose on their own merits, free of the baggage piled on by penny stock fraudsters.


Hey, Stupid. E-Mail Spam Doesn’t Work! There Is No Investor Relation Silver Bullet

Posted by AGORACOM at 5:26 PM on Wednesday, April 1st, 2009

I can’t get enough news from the SEC when it pertains to busting stock spammers.  I hate to get emotional when I post but who is a bigger dumb ass?

  • Small-Cap CEO’s that pay for stock spam with under the table cash; OR
  • E-Mail stock spammers that think this still works.

I need to create a survey – but I’m going with CEO’s that continue to think investor relations is a silver bullet that can solve their problems by hitting “send”.


I’d like to hear from you – please take this 1 question survey.


“Bailout Nation” Book Dropped by McGraw-Hill To Protect Its S&P Ratings Division From Damaging Analysis

Posted by AGORACOM at 3:46 AM on Wednesday, February 11th, 2009

The Wall Street credit-crisis “CYA” playbook continues to be run by those who do not want to accept their portion of the blame.  Specifically, ran this story titled Mcgraw Hill Drops Book Critical of S&P. What makes the story even more interesting is the fact that it was written by my friend Barry Ritholtz – who is frequently listed as one of the world’s top financial bloggers and often quoted right here on AGORACOM.

The book was so highly anticipated by Wall Street that a month away from publication, 22,000 copies had already been pre-sold.  Wow.

So why did McGraw Hill drop it? According to Portfolio, MH provided the following explanation:

McGraw Hill spokesman Steven Weiss this afternoon said the publisher dropped
the book because of a conflict with Ritholtz over editing, not because of his
criticism of S&P. “The material needed extensive corroboration across a range of
topics. We could not agree on unified approach with the author for resolving
the issues,” Weiss said. He denied that the publisher dropped the book because of what Ritholtz had written about S&P.

OK, anything is possible.  However, given the fact that Barry Ritholtz has both the smarts and the street cred that comes with the PYMWYMI (Put Your Money Where Your Mouth Is) nature of bloggers, I side with him when he provides the following retort from his blog:

Really? You cannot verify these footnotes?

As you can see, the overwhelming majority of the footnotes come with URL
So I guess if you lack an internet connection or are unfamiliar with Google,
you might have trouble corroborating the contents of the book. But for everyone else
over the age of 6 years old who is possession of any IQ score better than 75, it really
should not be a problem to accomplish.

But to prove it even further, I challenge any of the McGraw Hill editors or
(or any of the editorial staff)
to take a polygraph/lie detector test
– at my expense.

If the poly proves anything I said was false or anything Mr Weiss said was true, I will
let them edit the book however they want, or kill it altogether and not publish anywhere

I’m sold because whenever I’ve had righteousness on my side in the past, I too have challenged people to polygraph tests at my expense. I severely doubt a blogger of Barry’s stature is going to put his reputation on the line at his expense.


McGraw Hill blew it.  Sure, they were in a tough position but they put themselves there when they approached Barry to write about the bailout / crisis in the first place.

Clearly, MH publisher Herb Schaffner didn’t see the connection from the outset.  By the time the lightbulb went on and they needed Barry to tone it down, Barry advised “Sorry, Herb, but I don’t do diplomacy.” Barry has 34,000 subscribers (not a typo) for a reason  – he tells it like it is.

At the end of the day, MH made a massive tactical error when it dropped the book.  In this Obama / Geithner / Stimulus package environment, Barry’s criticism of the S&P probably wouldn’t have got much media play.  As such, MH would have been better off simply publishing it as is and letting the S&P stuff blend in with other issues raised by Barry in the book.

Now, S&P has become the book and MH has become the story….. and Barry has an even bigger stage to speak from.  God help those guys.


Harry Markopolos Warned “The World’s Largest Hedge Fund Is A Fraud” Despite Concerns For Family Safety. Why Was He Ignored?

Posted by AGORACOM at 11:21 AM on Thursday, December 18th, 2008

Harry Markopolos, Nov 7 2005
SEC Submission On Madoff

The $50 Billion Madoff Ponzi scheme has received enormous coverage, so I won’t bother repeating what everybody already knows.  Rather, like many people, I’m betting dollars to doughnuts that he wasn’t able to pull this off on his own.  At the very least, from day 1, I’ve stated that his sons had to be involved.  Turning him in was merely a poor attempt to let Dad take the fall while making the sons look like heroes. (I see a Law & Order episode coming).

However, the train doesn’t stop there.  A $50 Billion scam in the securities markets requires the cooperation and silence of a lot of people.  To this end, the SEC is taking a lot of heat for failing to investigate Madoff despite very compelling information being presented to it.  Specifically, fellow Greek Harry Markopolos submitted a paper to the SEC titled “The World’s Largest Hedge Fund Is A Fraud“.

How accurate is it?  Paul Kedrosky best described as “indefatigable, honest and empirical in making his case”.


Markopolos deserves accolades for not only providing irrefutable evidence – but for being courageous enough to do the right thing at the risk of his personal and family’s safety.  You have to ask yourself why was he concerned?  Was he afraid of the actions of just one man, Bernie Madoff, after being uncovered?  Or did Madoff require the involvement of nefarious characters to pull off a scam of this magnitude?

It all comes down to whether you believe in the lone gunman theory or not. I don’t.  When making your decision, consider this:


Yep, you read that right.  A top SEC compliance official (Eric Swanson) who worked for the SEC – when it found no problems at Bernard Madoff’s firm in 2005 – just happened to start dating and eventually marry Madoff’s niece, who was a compliance lawyer for Madoff’s company.

Now, they could have just met in a bar somewhere or, as Swanson claims, at an industry conference.  However, I can think of another way for an Senior SEC inspection official and a compliance lawyer to meet.  Like, during a preliminary investigation?

Madoff is going to be the crowining jewel of fraud in US capital markets – let’s just hope it doesn’t extend to actual corruption in US regulatory markets.  It all comes down to whether the SEC was simply grossly incompetent, or on the take.  It’s 50-50 right now …. but the relationship between an inspection official and a compliance officer puts my money on the latter.

Othewise, I can’t imagine why the SEC would ignore a complaint when the submitter basically tells you the life of him and his family could be on the line.  Under this circumstance, why was he ignored by the SEC?


Why Wall Street CEO’s Must Go To Jail And Payback Billions In Bonuses

Posted by AGORACOM at 10:56 PM on Monday, October 6th, 2008

“The truth is, through criminal neglect and competence, the people at the
top of these firms chose to look away, to take more risk, to enrich themselves
and to put shareholders and indeed, the country itself and the country’s
economy at risk.  It is truly not only a shame, it is a crime”  – 60 Minutes

Forget the blame game, forget the justified rants of anger. US taxpayers were asked to risk $700 Billion for a Wall Street bailout that may not even work – but do they really know why?

The rest of the world has been swept up in this crisis, with citizens all over the world afraid their banks are going to shut down – but do they really know why?

I’ll get to the why in a second.

In the meantime, as the world sweats, CEO’s at Lehman, Bear Stearns, AIG, Fannie, Freddie, etc., etc. each walked away with tens and even hundreds of millions of dollars in cash and stock.  Lehman CEO, Richard Fuld, himself walked away with $480,000,000 (yes, 480 million) since 2000. That equates to $60,000,000 per year for a guy that drove Lehman into bankruptcy and significantly contributed to the current crisis.

Yes, Fuld “feels horrible about what happened” but I suspect $480,000,000 goes a long way towards treatment of his horror.

Other CEO’s that feel horrible:

Stanley O’Neal, Merrill Lynch’s former CEO, took home compensation with an estimated value of $145.2 million from 1997 to 2007, according to Equilar. Sorry, forgot to add that he received a $161-million retirement package when he was ousted in October.

Kerry Killinger, who last month lost his job as CEO of the failing Washington Mutual, took home pay valued at $98 million, Equilar said.


They all did it by selling garbage they knew would not pay – and then selling insurance against the garbage that they knew they could not cover.  To avoid regulation, they didn’t call it “insurance”, they called it a “credit default swap”.

How big is the market for credit default swaps? $50 – 60 TRILLION dollars.  We can’t be sure because it is an unregulated market.

In short, they were smart enough to create a $50 Trillion industry and call it something that would escape regulation – but they couldn’t see the implosion coming?

How about this – they just ignored it for as long as they could collect $60,000,000 per year and then F$%K everybody else when it all collapsed because “I got paid”.

Thanks to Paul Kedrosky, who found this fantastic 60 Minutes segment that you absolutely need to watch.  In case you never thought about it, had any doubts as to Wall Street’s guilt, or simply needed the hard evidence/info necessary to back up your claims, this is the video to watch. A great use of 12 minutes of your time.

UPDATE: One small but juicy piece of good news is that Richard Fuld was knocked out cold at a gym by one hell of a pissed off investor. One punch and out.

UPDATE 2: October 9th and Dylan Ratigan of CNBC is very pissed on CNBC after Dow falls 680 points … wants people to go to jail. Welcome to the club Dylan, we’ve got jackets!


SEC Charges California Biotech For Fraudulent Stock Scheme

Posted by AGORACOM at 3:59 PM on Tuesday, September 30th, 2008

For all the heat the SEC has taken lately, you have to give them full marks for cracking down on the micro-cap pump and dump schemes. Here is the latest:

Washington, D.C., Sept. 25, 2008 – The Securities and Exchange Commission today charged Rancho Cordova, Calif.-based Telomolecular Corp. and two of its former executives for their roles in a stock scheme based on false claims to investors that the biotechnology start-up company was on the verge of financial and scientific success in developing anti-aging treatments and cancer cures. (FULL STORY)


The Telomolecular offense isn’t as far off the beaten path as you would think. We still continue to receive calls from companies that make some pretty outrageous claims. Yes, some are complete scams but some are from well-meaning CEO’s that have simply fallen too far in love with their company and waayyyy overestimate their capabilities.

If you fall into the latter, don’t think you’re too far off from getting yourself busted by the SEC. Having evil intentions isn’t a necessary pre-requisite to charges being laid by the SEC.

“Companies raising capital from investors need to provide realistic and
accurate information
about their resources and prospects for future
success,” said Marc Fagel, Director of the SEC’s San Francisco Regional Office.”


Keep it real. There is nothing wrong with being super enthusiastic about your product or service – but you have to separate that from your public communications and performance expectations. Google wasn’t built in a day, so neither will your company.