SEC Halts Trading in 35 Penny Stocks Over Spam E-Mails
The U.S. Securities and Exchange Commission suspended trading in the stocks of 35 small companies linked to spam e-mail campaigns urging small investors to buy shares.
The SEC said it launched an enforcement effort to protect investors from potentially fraudulent spam e-mail promoting small company stocks with phrases like, "Ready to Explode," "Ride the Bull" and "Fast Money."
"Today's action will disrupt the operations of these boiler rooms and make it harder for the spammers and promoters to dump their stock on an unsuspecting public," SEC enforcement director Linda Thomsen said at a press conference on Thursday.
The commission said in a statement that an estimated 100 million of these spam messages are sent every week, triggering dramatic spikes in share price and trading volume before the spamming stops and investors lose their money.
It said the stocks halted typically sell for less than $1 a share and are quoted on the Pink Sheets quotation service. The trading suspensions began on Thursday and will last for 10 business days, ending at noon on March 21, the agency said.
Mark Schonfeld, director of the SEC's northeast regional office, said that investor losses related to the 35 companies are in the tens of millions of dollars.
"Now that we have stopped the trading in these stocks, we will focus our attention on the people behind the spam and profiting from it," Schonfeld said.
He said the SEC is investigating the companies themselves as well as outsiders, and that the same people are likely behind multiple spam campaigns.
In one spam campaign involving Apparel Manufacturing Associates, the SEC said the company's stock closed at 6 cents on trading volume of 3,500 shares on Friday, Dec. 15, 2006.
After a weekend spam campaign distributed e-mails proclaiming "Huge news expected out on APPM, get in before the wire, We're taking it all the way to $1.00," trading volume on Monday, Dec. 18, 2006, soared to 484,568 shares with the price spiking to over 19 cents a share.
Two days later the APPM price climbed to 45 cents. However, by Dec. 27, 2006, the price had slumped to 10 cents on trading volume of 65,350 shares, the agency said.
SEC Chairman Christopher Cox said that not even the investor protection agency is immune to the onslaught of stock-related spam. He said the SEC's public affairs director, John Nester, received an e-mail touting the stock of one of the 35 companies.
"Not even even the SEC's spam filter can stop all this spam," Cox said.
The SEC said it suspended trading in the following stocks:
Advanced Powerline Technologies (APWL.PK)
America Asia Petroleum (AAPM.PK)
Amerossi Int'l Group (AMSN.PK)
Apparel Manufacturing Associates (APPM.PK)
Asgard Holdings (AGHG.PK)
China Gold (CGDC.PK)
CTR Investments & Consulting (CIVX.PK)
DC Brands International (DCBI.PK)
Equal Trading (EQTD.PK)
Equitable Mining (EQBM.PK)
Espion International (EPLJ.PK)
Goldmark Industries (GDKI.PK)
Healtheuniverse, Inc. (HLUN.PK)
Interlink Global (ILKG.PK)
Investigative Services Agencies (IVAY.PK)
iPackets International (IPKL.PK)
Koko Petroleum (KKPT.PK)
Leatt Corporation (LEAT.PK)
LOM Logistics (LOMJ.PK)
Modern Energy (MODR.PK)
National Healthcare Logistics (NHLG.PK)
Presidents Financial (PZFC.PK)
Red Truck Entertainment (RTRK.PK)
Relay Capital (RLYC.PK)
Rodedawg International Industries (RWGI.PK)
Rouchon Industries (RCHN.PK)
Software Effective Solutions (SFWJ.PK)
Solucorp Industries (SLUP.PK)
UBA Technology (UBTG.PK)
Wataire Industries (WTAF.PK)
WayPoint Biomedical Holdings (WYPH.PK)
Wineco Productions (WNCP.PK)