Feds bust 44 Internet stock tipsters
The SEC has drawn up a very long list of very small offending companies
The US Securities and Exchange Commission has produced a list of 44 tipsters who it claims have fraudulently recommended 235 small companies' stocks on the Internet. The outfits accused all seem small, but the range of offences the SEC alleges suggest that it's a jungle out there -- as if we didn't know already. The tipsters are claimed to have been illegally touting securities and misrepresenting themselves as providing independent advice when in many cases they were being paid by the companies they were promoting. They sometimes had shares in these companies, or were rewarded with stock, and sold the shares once the price jumped after they'd recommended it. Richard Walker, SEC director of enforcement, says that in all cases the promoters purported to be giving independent opinions when those opinions were in reality "bought and paid for". The amount paid totalled $6.2 million cash, and 1.8 million shares. Although the tipsters were frequently individuals or very small outfits working from home, they appear to have been able to have considerable influence on small stocks. Companies buying their services paid as much as $300,000, says the SEC. And hard cash doesn't seem to have been the only factor involved. The SEC reports that one promoter sent out six million emails promoting his father's chain of restaurants. ® Click for more stories Click for story index
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