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The Equity Alert case

The SEC instituted proceedings against Equity Alert.com, a Vancouver, British Columbia-based Internet stock promoter; its parent, Innotech Corporation; two principals of those entities (Harmel S. Rayat and Bhupinder ("Bill") S. Mann); and two public companies (T&G2, Inc. ("T&G") and Virilitec Industries, Inc. ("Virilitec").

According to the SEC, Equity Alert was initially retained to promote an over the counter company called International Mercantile Corporation (IMC), T&G2's predecessor. The person who retained Equity Alert was president of a private company that was negotiating to merge with IMC in order to form the company that would become T&G2. That individual arranged for a private company that he controlled to provide Equity Alert with a promissory note that could be converted into IMC stock.

Equity Alert accepted the assignment and disseminated an e-mail characterizing IMC as the newest of the "red hot" biometric companies that had begun to thrive after the terrorist attacks of September 11, 2001. That promotional campaign proved successful. In the two days that followed the e-mail, IMC's stock price rose 31 percent, from $1.13 to $1.48, and volume soared.

That proved profitable for Equity Alert. One day after the e-mail was distributed, Equity Alert sold its IMC shares for $132,500.

A similar pattern occurred with Equity Alert's promotion of Virilitec, a Brooklyn, New York company which develops nutritional supplements that purportedly enhance sperm count and sexual virility. In that case, the husband of Virilitec's president arranged for one of the Company's long-time shareholders to transfer 40,000 Virilitec shares to Equity Alert as consideration for promoting the Company.

After Equity Alert began to pump up interest in the Company - using promotional e-mails - Virilitec shares experienced a spike in trading volume, and Equity Alert sold its shares for almost $39,000.

The SEC maintains that the IMC and Virilitec shares delivered to Equity Alert were restricted because they were obtained from persons who were directly or indirectly in control positions with those companies. Therefore, the shares should not have been resold by Equity Alert for at least one year.

Each of the respondents named in the Equity Alert case agreed to settle the proceedings without admitting or denying these findings.

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