The SEC charged an upstate New York-based penny stock promoter and his affiliated Website with fraud for failing to disclose that he was paid by certain issuers to promote their stock while simultaneously liquidating millions of his own shares for profits of $3 million.   At various times in 2007 and 2008, Christopher Wheeler of Victor, NY, allegedly received compensation to promote several thinly-traded penny stocks on his website, OTCStockExchange.com.   The Website claimed to "have compiled a long list of successful stock picks" and to afford investors the opportunity to "make a fortune."

SEC Staff Credited in the Case.  Ken Joseph and Christopher Castano did the investigating, and Preethi Krishnamurthy will lead litigation efforts.

    Further Alleged Details.   Wheeler supposedly received millions of shares in undisclosed compensation from issuers, then featured the issuers' stock on OTCStockExchange.com, recommended that investors purchase the securities, and posted lofty price predictions without having any reasonable basis.  The promotional efforts had the effect of temporarily increasing trade volume and share price.  Wheeler took advantage of these "blips" to "dump" the issuers' shares from his personal brokerage account.

Wheeler traded in these securities:  Infinity Medical Group;  Soleil Systems;  Cannon Exploration;  and, China Jiangsu Golden Horse Steel Ball.  The SEC seeks to bar Wheeler from the industry, and obtain an order requiring him to pay fines, and disgorge ill-gotten gains plus interest.   [SEC PR 11-12, 1/14]