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U.S. Securities and Exchange Commission

before the

Release No. 46108 / June 25, 2002

File No. 3-10811

In the Matter of

Benjamin C. Snyder





The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Benjamin C. Snyder ("Snyder" or "Respondent").


In anticipation of the institution of these proceedings, Snyder has submitted an Offer of Settlement ("Offer") to the Commission, which the Commission has determined to accept. Solely for the purpose of these proceedings, and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, Snyder, without admitting or denying the findings contained herein, except that Respondent admits to the Commission's jurisdiction over him and over the subject matter of these proceedings, consents to the issuance of this Order Instituting Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order ("Order").


On the basis of this Order and the Respondent's Offer of Settlement, the Commission finds that:

On May 13, 2002 at 9:30 a.m. EST, Respondent, Benjamin C. Snyder, a 17-year old high school student of Lawrenceville, Georgia, purchased 785 shares of thinly traded Viragen International, Inc. ("Viragen") common stock via an online brokerage account that Respondent's father, a Lawrenceville minister, had opened for him a month earlier. Respondent purchased the Viragen stock at $0.60 at a total cost of $480.99. The trade was the only Viragen transaction reported for that trading day.

On May 13, 2002, between 7:44 p.m. EST and 7:55 p.m. EST, Respondent, under an alias, made a series of materially false statements on eight popular Lycos/Raging Bull ("Raging Bull") Internet message boards claiming, among other things, that Viragen International, Inc. ("Viragen") had discovered an effective Anthrax treatment. The statements were made in the form of a Bloomberg, LP ("Bloomberg") news story and listed an actual Bloomberg financial reporter as the author. The bogus Bloomberg story is below (with a copy of the actual posting attached):

05/13 15:03

Viragen Invents New Anthrax Treatment; Shares to Rise

By John Rega

Plantation, Florida May 13 (Bloomberg) -- A small bio-research company called Viragen International Inc. (VGNI.OB) has discovered an effective anthrax treatment called Vivox. It's a two-part intramuscular injection for the treatment of both inhalation and cutaneous anthrax. The first injection is given right after the diagnoses of anthrax, which prevents the bacteria's ability to replicate. The second is then given two days later, which kills the remaining anthrax spores.

Viragen submitted a new drug application to the FDA two months ago, and was just approved last week. The FDA wanted to keep Vivox a secret until mass production because testing involved the use of live anthrax spores, which would have caused unnecessary anxiety for the general public in the area.

The treatment is suitable for the elderly, unlike Cipro, and further results will tell whether it is suitable for children. Viragen has recently signed a contract to supply the United States military with Vivox. It has been reported that hospitals across the U.S. have already placed over 4 million orders collectively. Viragen International CEO Gerald Smith had to say, "We are very pleased with the results of Vivox, and hope it becomes a major ally in the war on anthrax." Vivox will be featured on ABC-World News Tonight this week. As publicity around Vivox increases, so will share price. It is now expected to multiply 6-7 times, giving shareholders a potential gold mine.

Respondent purposefully made the posts from a computer terminal located at the Lawrenceville Branch of the Gwinnett County (GA) Public Library to conceal his identity and avoid detection. Respondent made the fictitious posts in an effort to increase artificially Viragen's share price and profit by selling the 785 Viragen shares he previously purchased.

However, on May 14, 2002, a mere 20 shares of Viragen stock traded at $0.55. Thus, Respondent returned to the Lawrenceville library on May 15, 2002, and re-posted the blatantly false Bloomberg story on several Raging Bull message boards after his original posts did not appear to have an effect on Viragen's share price. Viragen stock was inactive on May 15, 2002. In addition to concocting the phony Bloomberg story, Respondent lied in the Raging Bull postings about his own position in Viragen stock, stating that he had "no position" in Viragen stock, when in fact, Respondent owned 785 shares.

Both of Respondent's efforts to artificially inflate the price of Viragen's stock failed. On May 16, 2002, Viragen's stock traded 9, 000 shares at approximately $0.60. On May 17, 2002, at approximately 3:00 p.m., the SEC staff contacted the Respondent who confessed fully to his scheme as set forth in these findings. The Respondent's father subsequently liquidated the account.


Section 10(b) of the Exchange Act and Rule 10b-5 thereunder proscribe the making of materially false or misleading statements in connection with the purchase or sale of any security. False statements about a public company are "in connection with" the purchase or sale of a security when they are made in a manner "reasonably calculated" to influence the investing public. SEC v. Texas Gulf Sulphur Co., 401 F.2d 833, 860-862 (2nd Cir. 1968) (en banc), cert. denied sub nom. Coates v. SEC, 394 U.S. 976 (1969). A fact is material if there is a "substantial likelihood that the . . . fact would have been viewed by the reasonable investor as having significantly altered the `total mix' of information made available." TSC Industries v. Northway, Inc., 426 U.S. 438, 449 (1976); see also Basic, Inc. v. Levinson, 485 U.S. 224 (1988). In addition to establishing the "in connection with" and "materiality" requirements for liability under Exchange Act Section 10(b) and Rule 10b-5 thereunder, scienter is also required for a violation of the antifraud provisions of the federal securities laws. Aaron v. SEC, 446 U.S. 680, 691 (1980). The Supreme Court defines scienter as "a mental state embracing intent to deceive, manipulate, or defraud." Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976). Recklessness satisfies the scienter requirement. Rolf v. Blyth Eastman Dillon & Co., 570 F.2d 38, 44 (2d Cir. 1978), cert. denied, 439 U.S. 1039 (1978); SEC v. Blavin, 760 F.2d 706, 711 (6th Cir. 1985).

Snyder's statements were blatantly false, were posted on several active Internet message boards dedicated to investor discussions, and were presented in the form of a Bloomberg article attributed to an actual Bloomberg reporter. In addition, Snyder attempted to evade detection and conceal his identity by posting his messages, under an alias, from a public computer terminal at a public library. Further, Snyder asserted in certain of his postings that he had no position in Viragen stock, when in reality he owned 785 shares. Finally, the claims contained in the bogus Bloomberg article - that Viragen's share price was "expected to multiply 6-7 times" as a result of receiving FDA approval for a secretly developed and tested "effective anthrax cure" - were material and were designed to induce prospective investors to purchase Viragen stock.

Based on the above-described conduct, the Commission finds that Snyder violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.


In view of the foregoing, the Commission deems it appropriate to accept Snyder's Offer and to impose the Cease-and-Desist Order specified therein.

Accordingly, IT IS HEREBY ORDERED that pursuant to Section 21C of the Exchange Act, Snyder cease and desist from committing or causing any violation, and any future violation, of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

By the Commission.

Jonathan G. Katz


Modified: 06/25/2002