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The Securities and Exchange Commission apparently wants to dispel the notion that the Internet gives stock manipulators a mask of anonymity. In its fourth Net-related fraud sweep, the SEC announced Wednesday that it has brought 15 enforcement actions against 33 companies and individuals who engaged in “pump and dump” stock scams online. The parties named in the actions allegedly used the Net to inflate the stock prices of more than 70 microcap companies, which are typically defined as companies having a market capitalization below $50 million, reaping more than $10 million in illegal profits in the process. They used electronic newsletters, Web sites and message boards to spread false information on the companies, inflating their market capitalization by over $1.7 billion in aggregate. “What used to require a network of professional promoters and brokers, banks of telephones and months to accomplish can now be done in minutes by a single person using the Internet and a home computer,” said SEC Director Richard H. Walker in a statement. In conjunction with the announcement of this fraud sweep, the commission published a brochure that aims to educate investors on how to detect possible pump-and-dump scams on the Net. The companies and individuals charged in this sweep include securities professionals and novice traders from around the globe, including operations in Canada, the Bahamas and Germany, in addition to the U.S. The companies whose stocks were involved include Web companies, a furniture manufacturer and a technology firm that falsely claimed to have produced self-cooling beverage cans. All of the stocks were thinly traded microcaps, most of them trading on Nasdaq’s over-the-counter bulletin board. Thinly traded stocks are at higher risk for these types of scams because of their small floats, that is, the small amount of the stock that is available to the public. Because the float is so limited, a few trades can create a great swing in price. In two of the cases, the parties named in the suit made millions in illegal profits. The SEC is accusing Michael Furr of touting 26 “penny stocks” through his Web site, e-mails and a national radio show. After pumping the stocks with false information and selling his shares, Furr realized profits of more than $3.4 million. Another pair of violators consorted with a company called Broadband Wireless International, causing the stock price to jump from 12 cents to more than $12 a share within several months. This announcement of the 15 cases, which bring the SEC’s total number of Internet-related enforcement actions to 180, comes just weeks after a former employee of Internet Wire allegedly issued a fabricated press release which had a staggering effect on the company’s stock price. Shares of the software company Emulex tumbled from $113 a share to $43 in a matter of hours as a result of the dissemination of the false press release. It took the SEC just six days of investigation to apprehend the 23-year old suspect. Related Articles from The Industry Standard: Feds Make Arrest in Emulex Hoax Case Ex-Nvidia Employee Charged With Insider Trading Feds Crack Down on Massive Securities Fraud Copyright � 2000 The Industry Standard

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