Like me, you may get bombarded with long email ads for some penny stock. They always tout how the stock is about to break out from $0.01/share to $0.05 or $10.00/share.
Did you ever get the sense that these may be scams. Gadzooks! Say it ain’t so!
The SEC today announced fraud charges and an asset freeze against the promoter of AwesomePennyStocks.com, a frequent trash dumper into my email accounts.
It charges that John Babikian used his sites for a “scalping” scam with the stock of America West Resources Inc. (AWSRQ). AWSRQ was low priced and thinly traded. Babikian fired off about 700,000 emails touting the stock. However, he failed to disclose that he owned 1.4 million shares of AWSRQ and was ready to sell them through a Swiss bank. The stock took off, and he made “ill-gotten” gains of more than $1.9 million.
The Babikian case is another example of the SEC’s focus on microcap stock fraud.
“The Enforcement Division, including its Microcap Fraud Task Force, is intensely focused on the scourge of microcap fraud and is aggressively working to root out microcap fraudsters who make their living by preying on unwitting investors,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.
Proving that the SEC has some teeth when it needs them,
The court’s order, among other things, freezes Babikian’s assets, temporarily restrains him from further similar misconduct, requires an accounting, prohibits document alteration or destruction, and expedites discovery. Pursuant to the order, the SEC has taken immediate action to freeze Babikian’s U.S. assets, which include the proceeds of the sale of a fractional interest in an airplane that Babikian had been attempting to have wired to an offshore bank, two homes in the Los Angeles area, and agricultural property in Oregon.