Potential investors also received opinions from Wall Street Capital as spam e-mails. These had headings such as "Revenues for PGNE to soar with newest 42 Well project" or "When PGNE explodes will you be there to enjoy the ride?" According to the complaint, Wall Street Capital purchased mass e-mail lists from third parties, which contained as many as 52 million addresses.
The SEC says that Wall Street Capital had strong incentives to boost the prices of the stocks it promoted. It typically received compensation in shares, which it sold into the promotions. With PrimeGen, it received five million shares, the complaint states.
The complaint also cites Wall Street Capital for creating the false appearance that its reports were independent. The reports stated that they were the "sole opinion" of Wall Street Capital, and that the companies had not approved the statements or their timing. According to the SEC, this was misleading, because the companies frequently read the text of the opinions and timed news releases around them.
With the PrimeGen reports, Wall Street Capital was aware that people were complaining about the accuracy of the news, the SEC says. Among other things, the firm received an e-mail on Sept. 17, 2009, which stated that there are "serious concerns that the above Co. is acting fraudulently." According to the complaint, Wall Street Capital ignored such concerns. "Even when they have ample warning signs that a scam is afoot, Defendants always do the same thing: they close their eyes and publish."
A few days later, Mr. Hume reviewed a post on an Internet message board which stated that "PGNE is nothing more than a scam," the complaint states. The SEC says Mr. Hume sent a link of the post to a contact in Canada, and told him that "things like this are posted everywhere ... some of the reasons why little trading lately."
Although the complaint mostly describes the PrimeGen promotion, it says that Wall Street Capital has been in business for 10 years and has disseminated misinformation for hundreds of penny stocks. Typically those who benefit have been insiders of the companies, who have been dumping their shares for a profit, the SEC says.
The SEC is asking for penny stock bans, disgorgement of ill-gotten gains and appropriate civil penalties.
William Scott Marshall
While Mr. Marshall is not a defendant in the SEC case, he has faced pump-and-dump allegations in the past. In 2004, the RCMP's Integrated Market Enforcement Team raided the offices of Vancouver-based OTC Bulletin Board listing Silver Star Energy Inc. The search warrant claimed that five men, including Mr. Marshall, had run the company as a pump-and-dump. The search made many headlines, but ultimately it did not lead to any charges.
Mr. Marshall left town in 2007, after somebody fired six gun shots into his Shaughnessy home.
