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U.S. Securities and Exchange Commission


Litigation Release No. 16509 / April 10, 2000

Securities and Exchange Commission v. Stephen C. Sayre, Independent Financial Reports, Inc. and Silver Screen Industries, Inc., Civil Action No. CV-00-03800WJR(ex) (C.D. Cal.)

The Securities and Exchange Commission ("Commission") announced that on April 8, 2000, a federal district judge in Los Angeles froze the assets of Stephen C. Sayre ("Sayre"), Independent Financial Reports, Inc. ("IFR"), and Silver Screen Industries, Inc. ("Silver Screen") in response to a complaint and application filed by the Commission on April 7, charging him with fraud.

The complaint alleges that Sayre, a 43 year old Los Angeles tree trimmer masquerading as a financial analyst, realized profits of over $1.43 million from illegal trading in the stock of a publicly traded company, eConnect. Through his company, IFR, Sayre twice issued recommendations to buy shares in eConnect. The recommendations were initially disseminated by Sayre through a wire service and were then more widely circulated by various Internet postings. In those recommendations, Sayre touted eConnect as an undervalued company and projected a short term "target" price of $12 to $25 a share and a one year "target" price of $100 - $135 a share. According to the complaint, prior to issuing the recommendations, Sayre bought several thousand shares of eConnect stock in accounts held by Silver Screen. After the IFR recommendations were published, Sayre took advantage of the market interest he had created by selling his eConnect stock into the inflated market. The complaint alleges that Sayre failed to disclose that he owned large amounts of eConnect stock through Silver Screen, which stock he intended to sell in contravention of his buy recommendations - a fraudulent practice known as "scalping." According to the complaint, Sayre realized profits of $1,435,997.66 from sales of eConnect stock.

In addition to the asset freeze granted by the Honorable Margaret M. Morrow, United States District Judge for the Central District of California, the Commission seeks permanently to enjoin Sayre and IFR from further violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also seeks an accounting, civil penalties, and disgorgement from the defendants. Silver Screen was not charged with fraud but was named as a relief defendant because it allegedly received the proceeds of Sayre's illegal trading.