Here is an update on the rat. You may have seen this already.
SEC launches suit against OTCStockExchange operator
Ticker Symbol: C:*SEC U:*SEC U:IMGR U:CNEX
SEC launches suit against OTCStockExchange operator
U.S. Securities and Exchange Commission (C:*SEC)
Friday January 14 2011 - Street Wire
Also U.S. Securities and Exchange Commission (U:*SEC) Street Wire
Also Infinity Medical Group Inc (U:IMGR) Street Wire
Also Cannon Exploration Inc (U:CNEX) Street Wire
by Mike Caswell
The U.S. Securities and Exchange Commission has filed civil charges against New York penny stock promoter Christopher Wheeler and his website, OTCStockExchange.com, for a $2.95-million pump-and-dump. (All figures are in U.S. dollars.) The SEC claims that Mr. Wheeler secretly sold shares of four pink sheets listings at the same time as he was predicting high prices for them on his website. Two of the companies, Infinity Medical Group Inc. and Cannon Exploration Inc., were based in Toronto.
The SEC's complaint, filed on Jan. 14, 2011, in the Southern District of New York, identifies Mr. Wheeler, 43, as the operator of OTCStockExchange. The site purports to "have compiled a long list of successful stock picks" that will afford investors the opportunity to "make a fortune" if they get in early. The site remains in operation, and is actively promoting stocks.
During 2007 and 2008, Mr. Wheeler used the site to promote four pink sheets stocks in return for millions of shares, the complaint states. He predicted lofty target prices that had no basis in reality. His efforts caused dramatic, but temporary, increases in volume for the companies, allowing him to dump his stock at a profit, according to the SEC.
With Infinity Medical, Mr. Wheeler touted the company as a provider of financing to medical and dental professionals looking to buy equipment. Between June 18 and Aug. 28, 2007, he received 1.3 million unrestricted shares in return for his services, the SEC claims. On July 27, 2007, his website recommended Infinity as a buy and predicted a long-term target price of $18. At the time, the stock was at $1.20. (It most recently traded at 0.02 cent). According to the SEC, Mr. Wheeler then sold over 380,000 shares from his personal account, for approximately $1-million in profits.
He promoted Infinity a second time in May, 2008, when he received two million shares from the company. He sold over 839,000 of those shares, making an additional $200,000, the SEC claims.
The Cannon Exploration promotion, as described by the SEC, followed a similar script. Around May, 2008, Mr. Wheeler received one million free-trading shares of the company, the complaint states. He then recommended it as a buy, with a $10 target price, stating that it had a letter of intent to buy a gold mine. The stock was at $1.12 at the time. (It most recently traded at 0.02 cent.) From May through September, 2008, Mr. Wheeler sold 774,000 shares, for a $1.3-millionm profit, the SEC claims.
In both cases, Mr. Wheeler failed to disclose that he would be selling the stocks he was promoting. He only provided a general disclaimer on his site, which said that OTCStockExchange "may make purchases or sales in such securities featured on [its] website." He did not disclose that he was selling the stocks while touting them as buys, the complaint states.
The two other pink sheets listings identified in the complaint are Solei Systems Inc. and China Jiangsu Golden Horse Steel Ball Inc. Mr. Wheeler made $254,000 and $56,000 selling shares of those two companies, according to the complaint.
The SEC is asking for appropriate civil penalties, disgorgement of ill-gotten gains, a permanent penny stock ban and an order restraining Mr. Wheeler from future violations. The SEC also named a relief defendant, privately held North Coast Advisors Inc., which holds some of the money Mr. Wheeler received from the scheme.
In filing the case, the SEC acknowledged the assistance of the RCMP and the Ontario Securities Commission.
© 2011 Canjex Publishing Ltd.
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