SEC suspends trading for 35 companies that sent hyped e-mail

Share this article:

The Securities and Exchange Commission suspended trading in the securities of 35 companies that have been the subject of recent and repeated e-mail campaigns.

The trading suspensions were ordered because of questions about the adequacy and accuracy of information about the companies. The report can be read at http://www.sec.gov/investor/35tradingsuspensions.htm .

The trading suspensions are part of an SEC effort, code-named "Operation Spamalot," to protect investors from potentially fraudulent e-mail hyping small-company stocks with phrases like "Ready to Explode," "Ride the Bull" and "Fast Money." The SEC estimates that 100 million of these spam messages are sent weekly, triggering dramatic spikes in share price and trading volume before the e-mailing stops and investors lose their money.

The securities of each of the 35 companies have been quoted on the Pink Sheets quotations service. According to the SEC, recent trading demonstrates how e-mail campaigns can affect stock prices and trading volume. For example, on Friday, Dec. 15, 2006, shares in Apparel Manufacturing Associates Inc. closed at 6 cents per share, with a trading volume of 3,500 shares.

After a weekend campaign distributed e-mails proclaiming "Huge news expected out on APPM, get in before the wire, we're taking it all the way to $1.00," trading volume Monday, Dec. 18, 2006, hit 484,568 shares with the price spiking to over 19 cents per share. Two days later, the price climbed to 45 cents. By Dec. 27, 2006, the price was back down to 10 cents per share on trading volume of 65,350 shares.

On Dec. 19, 2006, trading in Goldmark Industries Inc. closed at 17 cents per share on trading volume of 126,286 shares. On Dec. 20, 2006, the e-mail campaign titled "GDKI IS MAKING EVERYONE BANK!" was sent, setting a 5-day price target of $2. By Dec. 28, 2006, e-mails boasted of the price spike that had already been achieved, "$.28 (Up 152% in 2 days!!!)," and promised a 5-day price target of $1. That same day, GDKI closed at 35 cents per share on a volume of more than 5 million shares. By Jan. 9, 2007, the closing share price was back down to 15 cents per share.

A campaign for Healtheuniverse Inc. stock began Sept. 4, 2006, with e-mails incorporating a Healtheuniverse press release proclaiming that the company was "focused on being the first to commercialize stem cell applications in the $15 billion worldwide plastic surgery and cosmetic surgery market." On Sept. 7, 2006, HLUN closed at 12 cents per share on trading volume of 3,000 shares. The campaign accelerated, and HLUN shares spiked to 22 cents per share on Sept. 11, 2006, with more than 2.2 million shares trading hands. By Sept. 22, 2006, the closing price had dropped back down to 11 cents per share.

The trading suspensions, which began Thursday, March 8 at 9:30 a.m., will last for 10 business days, terminating at 11:59 p.m. EDT on March 21, 2007.

The 35 companies whose trading was suspended today are Advanced Powerline Technologies Inc.; America Asia Petroleum Corp.; Amerossi Int'l Group Inc.; Apparel Manufacturing Associates Inc.; Asgard Holdings Inc.; Biogenerics Ltd.; China Gold Corp.; CTR Investments and Consulting Inc.; DC Brands International Inc.; Equal Trading Inc.; Equitable Mining Corp.; Espion International Inc.; Goldmark Industries Inc.; GroFeed Inc.; Healtheuniverse Inc.; Interlink Global Corp.; Investigative Services Agencies Inc.; iPackets International Inc.; Koko Petroleum Inc.; Leatt Corporation; LOM Logistics Inc.; Modern Energy Corp.; National Healthcare Logistics, Inc.; Presidents Financial Corp.; Red Truck Entertainment Inc.; Relay Capital Corp.; Rodedawg International Industries Inc.; Rouchon Industries Inc.; Software Effective Solutions Corp.; Solucorp Industries Ltd.; Sports-stuff.com Inc.; UBA Technology Inc.; Wataire Industries Inc.; WayPoint Biomedical Holdings Inc.; and Wineco Productions Inc.

Share this article:
You must be a registered member of Direct Marketing News to post a comment.

Sign up to our newsletters

Follow us on Twitter @dmnews

Latest Jobs: