A loud round of applause please to the SEC for suspending trading in 3 more companies that haven’t adequately disclosed information to investors and have been the subject of both spam e-mail campaigns and promotional videos on YouTube.
The action warrants even further commendation when you consider the SEC probably has its hands full with major Wall Street problems related to the sub-prime debacle.
This isn’t the first time we’ve applauded the SEC for taking action on this very important issue that we are very passionate about ourselves. We consider stock/fax/mail spam a scourge on the industry because it inundates investors with unwanted solicitations, while also hurting the reputation of the small and micro-cap markets.
HIGHLIGHTS OF SEC PRESS RELEASE
The SEC issued a press release with the full details but here are the highlights:
1] The SEC identified the three companies as:
- NeoTactix Corp. (NTCX – OTCBB)
- Graystone Park Enterprises Inc. (GPKE – Pink Sheets) and
- Younger America Inc. (YNGR – Pink Sheets)
2] Trading in the three companies’ shares has been suspended for 10 business days and won’t resume until April 4.
3] “The videos often repeat information in the companies’ press releases and are posted to coincide with traditional spam e-mail campaigns.”
4] Each of the companies “inadequately disclosed its assets, business operations and financial condition.”
SEC ANTI-SPAM INITIATIVE HAS NETTED 50 COMPANIES, PROMOTERS, SPAMMERS AND INSIDERS
The SEC used the press release to also bring the public up to speed on the effectiveness of its Anti-Spam Initiative. You’ll be happy to know that more than 50 companies have had trading in their securities suspended and the SEC has brought several enforcement actions against the perpetrators behind these companies.
The Result? Spam complaints are down 68% in just one year, from 167,000 to 54,000. Like me, I’m sure you’ve also seen a drastic reduction in the amount of stock spam in your daily inbox (thank god).
CONCLUSION
It’s nice to know that complaints aren’t going into some black hole and collecting cobwebs. The SEC is obviously taking this matter very seriously, so you should do all you can to assist them and eliminate this scourge on our markets once and for all. If you have a complaint, make sure to send it to: [email protected]
Regards,
George
UPDATE: Footnoted.Org (a great blog that reports on the fine print footnotes in SEC filings) has some more details about the video hostess and company behind this latest SEC press release. Interesting stuff.
Good morning, Franklin and thanks for the feedback.
Yes, it is true that companies can be innocent victims of pump and dump scams. How? A group of investors go buy up the shares of a cheap company. They then turn around and spam it out via e-mail, fax, etc. and sell stock into buying from the public. The company notices an increase in volume and activity but doesn’t know why it’s happening.
We’ve actually had a couple of AGORACOM clients involved in a scenario like this. We received thousands of complaints in a 24-hour period and had to issue press releases to confirm we were not party to the promotion.
Now, is it unfair for the SEC to suspend them? Maybe. However, look at it from the SEC point of view. An actual investigation could take weeks or months – but the pump and dump is taking place right now. What do you do? Err on the side of safety and protect the public.
An alternative might be to ask the company to send out a denial press release. That tends to kill the scam because most investors will go check out the company before buying any stocks. The SEC could then allow trading to continue while it conducts an investigation. If it turns out the company was lying, there would be serious consequences.
Thanks for the post.
Regards,
George
Hi George,
That’s interesting indeed. Spammers be gone!!
Now, interestingly enough…one of the offending companies that you mentioned, NeoTactix Corp, defends itself by stating the following on their website (www.neotactix.com), “Please know that the Company does not know or have any relationship with the group producing and distributing this video. NeoTactix did not seek to promote our company in this way and did not know this video was produced or circulated until the SEC brought this to our attention. We are confident the SEC’s investigation will conclude the same.”
I’m not sure whether their claim of innocence is true, but assuming it is, isn’t it unfair for the SEC to suspend them without having done a thorough investigation? Or is it just the SEC’s “innocent until proven guilty” practice? 🙂
Franklin a.k.a Ninja.