Grifco Inc (GFCI)

[jtomm]

Dr. Bill,

You mentioned:

"there are two issues, one being that the SEC won't go after anyone that didn't file something omissive, or commissive in their 10 filings."

As far as I know, that's incorrect. The SEC can, does (occasionally), and should (more often) go after people who are committing fraud in connection with the purchase and sale of securities. I don't know of any limitations like you're suggesting. Do you have a link you could provide?

Here's one of a recent case where they went after people:

http://www.sec.gov/litigation/litreleases/lr19085.htm

I'm guessing there are many others over the years.

And my understanding (which I'm almost certain of) is the safe harbor / forward-looking statement does not protect someone if they are committing fraud. The SEC can go after fraudsters, regardless of any disclaimer. False and misleading statements are not allowed under any circumstances. The safe harbor thing is generally to protect legitimate executives who are giving legitimate forecasts.

Let's say my company owns 8 oil wells and I tell everyone we expect earnings to be .20 per share. But then a couple wells have equipment breakdown, some others get vandalized and the rest go into an unexpected steep decline. Earnings only come in at .01

In a case like that, unless I was really negligent and did something to cause the problems, the safe harbor protects me. And should. Business is risky; unexpected things occur.

But now a different example. If I claim 8 oil wells and forecast .20 per share, and it turns out I never owned any oil wells in the first place, then safe harbor doesn't protect me in the least. Nor should it. It was total fraud. The same would be true if I owned the 8 wells but they've only pumped 2 barrels a day for the last 5 years and I knew there's no way that could result in .20 earnings.

The SEC would have every right to sue me for fraud. There's a big difference between an honest attempt to forecast . . . . and fraud.

And on the fraud issue I still don't understand 10bag's comments. The SEC brings fraud suits all the time. I don't understand the idea of having to "turn it over to justice."

Where are you getting that info?

[By the way, none of my comments on this have been directed at grifco, just a discussion of the sec's role in general]