Nexaira Wireless (fka NXWI)

[scion]

SEC target Eiten accepts permanent ban

2013-12-23 13:40 ET - Street Wire
by Mike Caswell
http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-2134633&symbol=*SEC®ion=C

Geoffrey Eiten, the Boston tout who held himself out as "America's Leading Micro-Cap Stock Picker," has agreed to a permanent ban from penny stocks. Mr. Eiten accepted the ban to settle charges from the U.S. Securities and Exchange Commission stemming from overly optimistic reports he wrote that boosted four stocks. The SEC said he made projections that had no basis in reality, among them a claim that a Vancouver company had developed the "fastest router in the world."

Mr. Eiten's ban is contained in a consent to judgment dated Dec. 18, 2013. Among other things, he has agreed to an order that bars him from promoting penny stocks and from deriving any compensation from promoting penny stocks. He has also agreed to a ban from participating in any offering of penny stocks. Mr. Eiten did not admit to any wrongdoing in accepting the penalties. A judge still must accept the settlement.

The ban is in addition to any monetary penalties, which the judge still must determine. It is not clear what such penalties could be, but the SEC previously secured a $1.6-million default judgment for Mr. Eiten's company, National Financial Communications Corp. (All figures are in U.S. dollars.) The amount represented disgorgement of $605,262 in profits plus a $1-million civil penalty.

The penalties stem from a scheme that Mr. Eiten, a former broker, ran in 2010. The SEC claims that he issued glowing reports that misrepresented the prospects of four companies. He took no steps to verify highly promotional information he was disseminating, including claims that one company could produce $9.5-billion in gold, the SEC says. He also failed to fully disclose his compensation, according to the SEC.

A fast router and a $9.5-billlion gold mine

Details of the allegations are contained in a civil complaint that the SEC filed against Mr. Eiten and National Financial on Dec. 12, 2011, in the District of Massachusetts. The SEC identified Mr. Eiten, 61, as a broker of 20 years who moved to investor relations in 1991. His business was primarily touting penny stocks for paying clients.

Much of the complaint centres around companies that he touted with a newsletter called the OTC Special Situations Report. The report, which he sent out through mass mailings and spam, promoted a pair of Canadian listings in 2010, the SEC said. Among them was Nexaira Wireless, a Vancouver company that purportedly had developed the fastest router in the world.

Mr. Eiten made a number of misleading statements about Nexaira, telling potential investors that it was receiving revenue from Sprint and Comcast, according to the complaint. In reality, Nexaira's router had not received approval from the Federal Communications Commission and the company had no relationships with Sprint or Comcast, the SEC said. (The stock, which was at 45 cents at the time of Mr. Eiten's June, 2010, report, was last at 0.09 cent.)

Another Canadian listing that the SEC identified Mr. Eiten as having promoted was Clean Power Concepts Inc. of Regina, Sask. The company purportedly made fuel additives from crushed seed oil. Mr. Eiten's promotional statements about the stock included telling readers that it had proprietary technologies and licences that were "held airtight by the company." In reality, Clean Power had one patent pending and did not own any intellectual property, the SEC said. (The stock, which was around $1 when Mr. Eiten wrote the report, was last at 0.29 cent.)

The other stocks that Mr. Eiten touted were Gold Standard Mining Corp. of California and Endeavor Power Corp. of Massachusetts. With Gold Standard, he told readers the company was producing "$9.5 BILLION of pure gold -- and you can get in around $2 a share!" In reality, the company needed to raise a large amount of money to develop a mine, the SEC said.

In writing his reports, Mr. Eiten failed to fully disclose his substantial compensation, according to the complaint. With Gold Standard, his report disclosed a $25,000 payment, but the SEC claimed he received wires far in excess of that amount from two offshore entities. With Nexaira, Mr. Eiten only listed a $16,000 payment, but the SEC claims he received substantially more from a company called Norbaoten Invest Ltd.

The complaint sought an order prohibiting Mr. Eiten from promoting penny stocks, disgorgement of ill-gotten gains and an appropriate civil penalty.

While the case marked the first time the SEC had filed charges against Mr. Eiten, the regulator had mentioned his OTC Special Situations Report in at least one prior suit. In its March, 2009, case against Vancouver's Joseph Fernando and others, the SEC claimed that Mr. Fernando paid for coverage in the OTC Special Situations Report for Xpention Genetics Inc., a company that was purportedly developing a cancer vaccine. The SEC said the report contained several false or misleading claims about the company. The regulator ultimately obtained $2.87-million default judgment against Mr. Fernando.

Clean Power has also appeared in another more recent regulatory action. On Nov. 26, 2013, the B.C. Securities Commission claimed that Alnoor Ramji, a former B.C. resident, participated in a scheme to sell $21.5-million worth of stock in the company. During a one-month promotion that began in December, 2010, he and other unidentified associates sold 81 million shares while the company issued a number of promotional news releases, the BCSC said. Mr. Ramji has not responded to that case.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-2134633&symbol=*SEC®ion=C