View Full Version : Cat Litter Company Pet Ecology Brands Sending Junk Faxes

March 7th 05, 09:09 PM
The $1M Fax: Do Stock Promotions For Art4Love, Pet Ecology, Wall
Street Securities, Mellon Research Fit SEC 'Risk Based' Profile? /

March 4, 2005 (FinancialWire) Are stock promotions for Art4Love (OTC:

ALVI) Pet Ecology Brands (OTC: PECB), Wall Street Securities (OTC:
WLSC) or Mellon Research (OTC: MLON) similar to those that have
resulted in recent U.S. Securities Exchange Commission trading halts?

The SEC has recently initiated a new and aggressive campaign to foil
what it calls suspected pump and dump promoters by suspending trading
in the equities of companies that either participate in or have been
targeted by suspicious promotions.
Some observers believe such a "cooling off period" could "cool
the ardor" for suspect promotions if investors have an opportunity to
further evaluate junk faxes and spam emails they have received, and
could prevent some more na=EFve investors from putting their money into
stocks that are the subject of large-scale promotion campaigns based on

questionable substance or fundamentals.
According to an article by Deborah Solomon of the Dow Jones (NYSE: DJ)
Wall Street Journal, published February 2, 2005, "the SEC's move is
part of the agency's broader attempt to get ahead of possible fraud
before it becomes widespread." The article is at:
The SEC has apparently developed a "profile" to determine
candidates for potential trading halts. Solomon said the agency has
implemented a "risk based" approach to help identify potential
problems, and last year took the unusual step of halting trading in the

securities of 26 "shell" companies that failed to file timely financial

disclosures with the agency.
The SEC recently temporarily suspended trading in Commanche Properties
(OTC: CMCH) and Courtside Products (OTC: CSDP), both of which
disclaimed any company or executive association with the spam email
and/or faxes that triggered the SEC suspensions.
In the case of Courtside, the SEC said it is investigating whether
Courtside was misled by stock promoters who advised the firm to go
public by relying on an SEC rule that allows companies to issue shares
and raise money without registering with the commission, if certain
conditions are met. The conditions include issuing a portion of the
shares to "accredited" investors.
"Federal securities laws define an accredited investor as certain
entities or individuals, such as banks, insurance companies, registered

investment companies or trusts," said the Wall Street Journal.
"The SEC is looking into whether the stock promoters, who agency
officials declined to identify, may have falsely portrayed themselves
as accredited investors in order to gain shares of Courtside. The
promoters may have then sought to sell their shares to investors and
later drive up the price through spam e-mail and faxes. Investigators
want to determine whether the ultimate goal was to artificially
stimulate demand for the stock and then dump shares once the price
"The agency is expected to suspend trading in several other companies
within the coming weeks and months, according to people familiar with
the matter.
"At issue is the potential for so-called pump-and-dump schemes,
whereby speculative investors, company insiders or others try to
inflate demand for a stock by trumpeting positive-sounding information
about a company -- typically via e-mail -- and then cash in their
shares at the higher price. Often the information is false and the
stock quickly declines again," explained the Journal.
The SEC said that each week, the SEC's internet enforcement division,
headed by John Reed Stark, gets thousands of complaints from investors
"about spam email plugging stocks and other investments."
"We want to head off possible damage to shareholders before it occurs,"

John Reed Stark, chief of the SEC's office of Internet enforcement, was

quoted as saying.
Investigators want to determine whether the ultimate goal in many of
these instances is to "artificially stimulate demand for the stock
and then dump shares once the price increased."
The SEC hastened to add that it is not asserting that many of the
companies themselves are involved in the schemes. Often they are just

bystanders, but sometimes it results from stock issued to offshore and
even "promotional" sites and email and fax originators to create
"visibility," and the promoters often violate their promises to the
companies to sit on the shares.
"Under certain circumstances, an improper stock distribution in
violation of SEC regulations can be a prelude to a manipulation," Peter

Bresnan, an associate director in the SEC's enforcement division, was
quoted as saying.
Investrend Information's (http://www.investrendinformati=ADon.com)
Investors Resource Center has teamed with JunkFax
(http://www.junkfax.org), which allows those receiving unwanted stock
promotions to provide the evidence directly to FinancialWire.
Most but not all have missing or incomplete disclosures under U.S.
Securities and Exchange Commission Regulation 17(b):
"It shall be unlawful for any person, by the use of any means or
instruments of transportation or communication in interstate commerce
or by the use of the mails, to publish, give publicity to, or circulate

any notice, circular, advertisement, newspaper, article, letter,
investment service, or communication which, though not purporting to
offer a security for sale, describes such security for a consideration
received or to be received, directly or indirectly, from an issuer,
underwriter, or dealer, without fully disclosing the receipt, whether
past or prospective, of such consideration and the amount thereof."
"The SEC has told FinancialWire) that Regulation 17(b) means full and
complete compensation for research and any other services provided,
including amounts and sources, must be disclosed in 'every press
release' as well as other published documents, including emails or
faxes. The SEC states that third party compensations must include the

relationship of the payer to the issuer.
"In an email to FinancialWire, John J. Nester, a spokesperson for the
U=2ES. Securities and Exchange Commission, confirmed that regulators
interpret 17(b) to mean that specific compensation information must be
contained in all such communications to the public, and that a link to
a disclosure somewhere else, for example, is a violation of the
regulation. He further stated that the compensation disclosure
required by the SEC includes "amounts and sources" in any and all
communications mentioning the company.
Hot Stock Alert!!!, a fax broadcast by The Corporate & Investor
Relations Group, touted Wall Street Securities and Mellon Research for
an undisclosed number of shares of MLON from an undisclosed and unnamed

"third party investor of MLON."
Stocks to Watch set a 5-day target of $2 on Pet Ecology. Four days
later it was dropping 47.50% to $0.42. Stocks to Watch said it was
compensated ONE MILLION shares of PECB from an unnamed "third
party," worth in the neighborhood of $1 million for a fax
distribution before 3,169,569 shares traded Thursday, dropping the
bottom out of the stock. Stocks to Watch did warn that it could sell
its shares at any time.
Wall Street News touted Art4Love, with a "potential target" of
$4.50, in return for $41,620 paid by an undisclosed "third party."
The publication did disclose that the "third party" might buy or
sell "at any time."
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