U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16686/September 6, 2000
SEC v. Michael A. Furr, Civ. No. CV-00-09456 DT (Manx) (C.D. Cal.)
Today, the Securities and Exchange Commission sued Michael A. Furr, a resident of Trabuco Canyon, California, and alleged that Furr orchestrated an Internet stock manipulation scheme as a paid promoter of penny stocks. The Commission charges that from January 1999 through January 2000, Furr disseminated false information regarding at least 26 microcap companies through a free website, printed research reports, emails, and national radio show broadcasts. The Commission alleges that Furr made false revenue and stock price projections and misstated compensation he received for touting the companies. Further, the Commission alleges that Furr engaged in a fraudulent pattern of trading securities of the companies he touted through which he realized proceeds of at least $3.4 million. This action is part of the fourth nationwide Internet fraud sweep conducted by the Commission since October 1998.
In the Complaint, the Commission charged that Furr drafted and published on his website, www.wallstreetresearch.net, research reports containing false information that he repeated in e-mail messages and radio broadcasts. The reports, recommending the purchase of the companies' stock, contained false revenue and stock price projections on at least four companies that exceeded the projections Furr received from those companies. The Commission asserted that, in one or more instances, Furr falsely characterized company assets, company officers, and business ventures. Additionally, Furr misstated the form and amount of compensation he received for touting the companies. Although Furr disclosed in his reports that he received $4,995 for writing and distributing the reports, the Commission claims Furr requested and received compensation in the form of stock worth substantially more than the $4,995 disclosed. Furr's misrepresentations, which appeared on the Internet, fueled a dramatic rise in both the price and the trading volume of most of the touted companies' common stock. Finally, shortly after touting the securities, Furr sold the entire position of stock he received as compensation and realized proceeds exceeding $3.4 million. Furr failed to disclose his practice of liquidating his position in the securities he recommended.
The Commission is seeking an injunction against Furr to prevent violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Section 17(b) of the Securities Act of 1933. The Commission is further seeking disgorgement of his wrongfully obtained trading profits and a civil money penalty.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.htm . For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm . To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml. For a description of other SEC enforcement actions involved in this Internet Market Manipulation Sweep, visit http://www.sec.gov/news/extra/intmm.htm.