Image Courtesy Of ComicVine.com

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 Local.com was being acquired by Microsoft. Ballas again followed up by posting messages and links to the Local.com 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, Local.com’s stock price rose nearly 80 percent.

* Later that night, Local.com 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.

Regards,
George

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.

Regards,
George

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.

Regards,
George

InvestorsHub.com 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.

WERE INVESTORSHUB.COM MEMBERS VICTIMS OF THESE SCHEMES?

Further details about participants and charges are outlined below – but the big question for AGORACOM is whether members of InvestorsHub.com 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.

PARTICIPANTS CHARGED BY THE SEC

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.

CONCLUSION

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.

Regards,
George

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”.

SURVEY

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

Regards,
George

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”.

WAS BERNIE MADOFF A LONE THREAT TO MARKOPOLOS SAFETY, OR A LARGER WORSE GROUP?

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:

MADOFF NIECE (and Compliance Officer) MARRIED SENIOR SEC INSPECTION OFFICIAL

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?

Regards,
George

“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.

THE WHY

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!

Regards,
George