Thanks goes to Hack for posting this. No wonder it's so hard for these stocks to go up.
Alleged 'Scalper' Picks Up Four New Microcap Clients
Oct 20, 2003 (financialwire.net via COMTEX) -- (FinancialWire) Despite civil charges filed on August 13 against Capital Research Group, Inc., operator of TheSUBWAY.com website, and its owner, Charles T. Tamburello, for "scalping," the practice of "recommending the purchase of a stock to the general public while selling the stock at or near the same time," by the U.S. Securites and Exchange Commission, it continues to be "business" as usual for the firm, its alleged owner and website.
Viper Networks Inc. (OTC: VPER), Celerity Systems Inc. (OTCBB: CESY), and Senticore Inc. (OTCBB: SNTR) have joined Telecom Communications Inc. (OTCBB: TCOM) on either CRG's "Stock Watch List" or its "Stock Focus List."
These companies are touted in press releases that utilize a blatant form of ticker spam, providing "research" ratings for large cap companies intermingled with promotional phrases for the microcaps. The idea is that traders looking at "research" about the larger companies will notice the microcaps and perhaps open a trade for one or more of them. Neither CRG nor TheSUBWAY.com, however, provide any information about the qualifications of its "researchers."
The SEC alleged that CRG, TheSUBWAY.com and Tamburello are among five Florida stock promoters that "used the Internet, press releases, spam e-mails, and televised interviews to commit securities fraud through baseless financial projections" and the subsequent scalping.
"We expect great things from this stock! Watch this company; it just announced great news, and we think it is due to make a move in the near term!," CRG effused about Viper. According to CRG's disclosures, "CRG has been compensated 100,000 shares for Viper," worth $13,500 as of Friday's close.
Further, the firm admits "CRG intends to sell its shares. CRG has sold approximately zero shares to date. CRG may sell its shares for less than the target price given in this opinion. CRG's affiliates, officers, directors and employees may also have bought or may buy the shares discussed in this opinion and may profit in the event those shares rise in value. CRG will not advise as to when it decides to sell and does not and will not offer any opinion as to when others should sell; each investor must make that decision based on his or her judgment of the market."
SEC regulators have told FinancialWire that it is not sufficient to list compensation, as CRG has done for Viper, but that the disclosure must include the source of the compensation. If such compensation is from a third party, the SEC has told FinancialWire that the source must be named as well as the relationship of the payer to the issuer. Otherwise, said the regulators, it is a violation of Section 17(b).
CRG did not disclose the source of the compensation in its release, and it is not clear if the disclosures of selling in such close proximity to touts, even if and when disclosed, is similar to the allegations the SEC has made about the company only two months ago in a press release at www.sec.gov/litigation/litreleases/lr18286.htm, and in the underlying complaint located at www.sec.gov/litigation/complaints/comp18286.htm.
As to Celerity, CRG noted that "We expect great things from this stock! Watch this company; we think it is due to make a move in the near term!," in a now familiar mantra. The excitement was generated to shareholders and investors in a list of tickers, including Gemstar-TV Guide International (NASDAQ: GMST), which its "research" noted is now "Market Underperform."
The press release did not provide the qualifications of any analysts involved in the ratings, nor if the analyst(s) are members and subscribe to the ethics and standards of the Association for Investment Management and Research. The failure to provide these disclosures is also a violation of the "Standards for Independent Research Providers" promulgated by the FIRST Research Consortium.
CRG disclosed that it had received $6,000 for Celerity, but did not disclose the source. It stated it "intends to sell its shares," but did not disclose how many, if any shares it received.
As to Senticore Inc., CRG said, yes, you guessed: "We expect great things from this stock!," adding, "Watch this stock...it could be a huge gainer in near-term trading as market participants take notice!"
A "Peter Antipatis of Capital Research Group Inc.", also noted in the same release that E- LOAN Inc. (NASDAQ: EELN) is now "Market Perform," although Yahoo! Inc. (NASDAQ: YHOO) was listed as "Market Underperform." A FinancialWire reporter could not find a biography for Antipatis, nor a description of his analyst qualifications.
CRG disclosed it has received 200,000 shares of Senitor, valued at market close Friday at $184,000! CRG further disclosed it had so far sold approximately 50,000 shares but going forward "will not advise as to when it decides to sell." Presumably that will not be in close proximity to its touts, although the SEC's charges of "scalping" did not seem to dissuade the company last week when it disclosed ownership of 50,000 less shares of LocatePLUS (OTCBB: LPLHA) within five days of a tout.
As to Telecom Communications, TheSUBWAY.com, adding it to its "Stock Focus List," noted that, we, uh, "expect great things from this stock! Watch this company; it just announced great news, and we think it is due to make a move in the near term!" At the same time, Geron Corp. (NASDAQ: GERN) was moved by the firm to "Market Underperform." TheSUBWAY.com says it "ranks stocks from time to time utilizing both fundamental and technical analysis in comparison to the S&P 500 over the short term. These ratings reflect the opinion of Capital Research Group, Inc."
CRG said it has been compensated 100,000 shares of TCOM, but despite expecting "great things" and believing it is "due to make a move in the near term," CRG said it had cashed out. If the company had sold at Friday's closing, it would have received $113,000!
CRG discloses that it is " not a licensed broker, broker dealer, market maker, investment banker, investment advisor, analyst or underwriter," but fails to disclose that it is not a professional research organization, as its name implies, and does not provide any credentials for its "writers" or "analysts" as required by the Standards and the Association for Investment Management and Research.
CRG has disclosed a wide range of compensation by "one or more third parties on behalf of" some 38 public companies, but it does not disclose either the source or the relationship of the source to the issuer.
The company's compensation disclosures on its website as of Sunday, October 18.
12 to 20 Plus, Inc. (OTC: TTTP) -- CRG has been compensated three hundred thousand shares, CRG has sold approx zero shares.
Aussie Apparel Group Ltd. (OTCBB: AASI) -- CRG has been compensated one million shares, CRG has sold approx zero shares.
Amnis Systems Inc. (OTCBB: AMNM) -- CRG has been paid six thousand US dollars, CRG could recieve up to eighteen thousand US dollars.
Adirondack Pure Springs Mt Water Co Inc (OTCBB: APSW) -- CRG has been compensated one hundred thousand shares, CRG has sold approx one hundred thosuand shares.
Alternate Energy Corporation (OTCBB: ARGY) -- CRG has been compensated two hundred thousand shares, CRG has sold approx one hundred twenty five thousand shares.
Central Wireless, Inc. (OTCBB: CWIR) -- CRG has been compensated seven million shares, CRG has sold approx seven million shares.
CirTran Corp (OTCBB: CIRT) -- CRG has not been compensated, but is expecting one million shares.
Cyberkey Corp -- CRG has been compensated one hundred and fifty thousand shares, CRG has sold zero shares.
Elinear, Inc. (OTCBB: ELIN) -- CRG has been compensated forty thousand USD, in addition to sixty thousand restricted shares.
Elite Flight Solutions (OTCBB: EFLT) -- CRG has recieved one million six hundred thousand shares, CRG has sold approx one million four hundred thousand shares.
Fieldpoint Petroleum (OTCBB: FPPC) -- CRG has been paid twelve thousand USD.
Family Room Entertainment Corp (OTCBB: FMLY) -- CRG has been compensated two hundred thousand shares, CRG has sold approx one hundred thousand shares.
Genesis Technology Group, Inc. (OTCBB: GTEC) -- CRG has been compensated one million shares, CRG has sold approx zero shares.
GiveMePower Corp. (OTCBB: GMPW) -- CRG has been compensated seventy five thousand shares, CRG has sold approx twenty five thousand shares. CRG can receive up to two hundred thousand shares.
Global Business Markets, Inc. (OTCBB: GBMI) -- CRG has been compensated two million shares, CRG has sold approx zero shares.
Global Energy Group, Inc. (OTCBB: GENG) -- CRG has been compensated one hundred thousand shares, CRG has sold approx fifty thousand shares.
Group Management Corp -- CRG has been compensated five million shares. CRG has sold approx three million shares.
Health Express USA, Inc. (OTCBB: HEXS) -- CRG has been compensated one hundred and fifty thousand shares, CRG has sold approx one hundred twenty five thousand thousand shares. CRG has been compensated two hundred and fifty thousand restricted shares.
Hard to Treat Diseases Inc (OTC: HTDS) -- CRG has been compensated two million shares, CRG has sold approx five hundred thousand shares.
Integrated Performance Systems, Inc. (OTCBB: IPFS) -- CRG has been paid twenty thousand shares, CRG has sold approx two thousand shares.
Linux Gold Corporation (OTCBB: LNXGF) -- CRG has been compensated five hundred thousand shares, CRG has sold approx one hundred fifty thousand shares.
LocatePlus Holdongs, Corp. (OTCBB: LPLHA) -- CRG has been compensated nine hundred fifteen thousand nine hundred seventy two shares and forty two thousand five hundred dollars. CRG can receive up to two million two hundred thousand shares. CRG has sold approx three hundred thousand shares.
Magnum d'Or Resources (OTCBB:MAGR) -- CRG has been compensated one million shares, CRG has sold approx three hundred thousand shares.
Medical Staffing Solutions (OTCBB: MSSI) -- CRG has been compensated sixty thousand shares, CRG has sold aprox zero shares. CRG can recieve up to one hundred thousand shares.
North Star Diamonds Inc. (OTC: NSDM) -- CRG has been compensated two hundred and fifty thousand shares. CRG can recieve up to one million shares. CRG has sold approx zero shares.
Nova Communications Ltd. (OTCBB: NCVM) -- CRG has been compensated two million five hundred thousand shares, CRG has sold approx seven hundred fifty thousand shares.
Nettel Holding -- CRG has been compensated twenty thousand shares, CRG has sold approx ten thousand shares.
Paradise Tan, Inc. (OTC: PTNK) -- CRG has been compensated one million shares, CRG has sold approx zero shares.
QI Systems, Inc. -- CRG has been compensated one hundred and twenty five thousand shares, CRG has sold approx fifteen thousand shares.
R Wireless. Inc. (OTCBB: RWLS) -- CRG has been compensated fifty thousand USD, in addition to two hundred thousand restricted shares.
Reclamation Consulting and Applications, Inc. (OTCBB: RCAA) -- CRG has been compensated one hundred fifty thousand shares, CRG has sold approx eighty thousand shares.
Senticore, Inc.(OTCBB: SNTR) -- CRG has been compensated two hundred thousand shares, CRG has sold approx fifty thousand shares.
Telecom Communications, Inc. (OTCBB: TCOM) -- CRG has been compensated one hundred thousand shares, CRG has sold approx one hundred thousand shares.
TMI Holdings Inc. (OTCBB: TIMO) -- CRG has been compensated two hundred thousand shares. CRG has sold approx seventy five thousand shares.
Victory Capital Holdings Corp (OTCBB: VTYC) -- CRG has been compensated one hundred thousand shares, CRG has sold approx zero shares.
Viper Networks (OTC: VPER) -- CRG has been compensated one hundred thousand shares, CRG has sold approx zero shares.
Viseon, Inc. (OTCBB: VSNI) -- CRG has been compensated fifty thousand shares, CRG has sold approx twenty thousand shares.
Viva International, Inc. (OTCBB: VIVI) -- CRG has received one hundred and fifty thousand shares. CRG can recieve up to two hundred and twenty five thousand shares. CRG has sold approx fifty thousand shares.
It is not clear how what some view as truly exhorbitant fees are channeled to CRG, especially if the companies themselves are somehow supportive of the payments, and how either the overhang or actual selling benefits either the payers or the shareholders of such companies.Eresearchtechnology, Inc. (NASDAQ: ERES) just on the basis that such payments to acknowledged touters in which management is involved, reflected, in the analyst's view, negatively on management's decision-making capabilities.
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