The SEC announced 17 suspensions in its latest "proactive effort to combat microcap stock fraud."  Trading was suspended in 17 microcap stocks because of questions about the adequacy and accuracy of publicly available information about the companies, which trade in the OTC market.

SEC Team Effort.   Participating in this project were the following SEC units:  L.A., Miami, N.Y. and Phila Regional Offices;  Office of Market Intelligence;  the new Microcap Fraud Working Group, which uses a coordinated, proactive approach to detecting and deterring fraud involving microcap securities.  The trading suspensions follow a similar suspension last week against Uniontown Energy Inc. (UTOG), based in Nevada and Vancouver, CA.

“They may be called ‘penny stocks,’ but victims of microcap fraud can suffer devastating losses.  The SEC’s new Microcap Fraud Working Group is targeting the insiders and promoters, as well as the transfer agents, attorneys, auditors, broker-dealers, and other “gatekeepers” who flourish in the shadows of this less-than-transparent market.”  - - Robert Khuzami, SEC Enforcement Director. 

•     American Pacific Rim Commerce Group (APRM), based in Citra, Fla.
•     Anywhere MD, Inc. (ANWM), based in Altascadero, Calif.
•     Calypso Wireless Inc. (CLYW), based in Houston.
•     Cascadia Investments, Inc. (CDIV), based in Tacoma, Wash.
•     CytoGenix Inc. (CYGX), based in Houston.
•     Emerging Healthcare Solutions Inc. (EHSO), based in Houston.
•     Evolution Solar Corp. (EVSO), based in The Woodlands, Texas.
•     Global Resource Corp. (GBRC), based in Morrisville, N.C.
•     Go Solar USA Inc. (GSLO), based in New Orleans.
•     Kore Nutrition Inc. (KORE), based in Henderson, Nev.
•     Laidlaw Energy Group Inc. (LLEG), based in New York City.
•     Mind Technologies Inc. (METK), based in Cardiff, Calif.
•     Montvale Technologies Inc. (IVVI), based in Montvale, N.J.
•     MSGI Security Solutions Inc. (MSGI), based in New York City.
•     Prime Star Group Inc. (PSGI), based in Las Vegas, Nev.
•     Solar Park Initiatives Inc. (SOPV), based in Ponte Verde Beach, Fla.
•     United States Oil & Gas Corp. (USOG), based in Austin, Texas.

Examples of the Promotions:

Calypso Wireless Inc. has not filed periodic reports since February 2008, when it filed a report for the period ending 9/30/07.  Despite that, the company’s share price rose from 4 cents on Sept. 21, 2011 to an intra-day high of 17 cents on Sept. 24, 2011.  Over the same period, trading volume jumped to nearly six million shares, up from 376,000 shares. On Sept. 24, 2011, a stock-promoting website encouraged investors to continue buying Calypso Wireless shares (PINK: CLYW, CLYW message board), stating, in part, “Over the week, CLYW stock has been running wild … This CLYW stock rush happened just like that, on no company’s news and on old, well known SEC filings, done for the investment community.”
    
Kore Nutrition Inc. shares in  began to spike on 8/31/10, following the release of a company-paid research report setting a target price of $10.50.  Moreover, on Sept. 1 and 8, 2010, the company issued press releases announcing new distribution agreements to market its energy drinks.  The research report and distribution agreement claims were reiterated on numerous stock-promotion websites, touting Kore Nutrition as a “winner.”  Kore Nutrition’s quarterly report for the period ending Sept. 30, 2010, filed with the SEC on Nov. 15, 2010, made no mention of the announced distribution agreements.
    
Montvale Technologies Inc. announced the dissolution of the company on 2/12/10, and last filed financial statements with the SEC for the third quarter of 2009.  The company’s shares have nonetheless continued to trade, and to be promoted.  On Dec. 22, 2010, a website recommended a “closer look” at Montvale Technologies, claiming it “has the potential to do very well in the short term.”  That day, the share price rose 75 percent from 12 cents to 20 cents, and trading volume soared 500 percent over the prior day.

The Microcap Fraud Working Group.   A joint initiative of the SEC’s Enforcement Division and OCIE.  The Working Group is pursuing a strategic approach to combating microcap fraud by focusing on recidivists and insiders, and on the attorneys, auditors, broker-dealers, transfer agents and other gatekeepers that facilitate a large volume of the fraud in this sector.  The Working Group is comprised of staff from the SEC’s headquarters in Washington D.C., each of its 11 regional offices, and from the Office of Market Intelligence, Division of Corporation Finance, Division of Risk, Strategy, and Financial Innovation, Office of General Counsel, Division of Trading and Markets, and the Division of Investment Management.

For further details, go to:   [SEC PR 11-120, 6/7/11]