U.S. Securities and Exchange Commission
LITIGATION Release No. 16842 / December 27, 2000
Securities and Exchange Commission v. John Westergaard, et al., U.S. District Court for the Southern District of New York (Civil Action No. 00 Civ.9776)
SEC NAMES WESTERGAARD, TWO ENTITIES IN INTERNET TOUTING CASE
The Commission today sued John Westergaard, Westergaard.com, Inc., and Westergaard Broadcasting Network.com, Inc. (collectively WCI or defendants) for broadly disseminating on the Internet and through press releases purportedly "independent" analysis of publicly-traded securities when in fact defendants had been paid to publish that analysis. The complaint alleges that the defendants charged small-cap publicly traded companies up to $48,000 to publish positive reports about them that were disseminated through three media: press releases, an Internet radio show, and an Internet website. The complaint also alleges that Westergaard misled prospective investors by falsely claiming the analysis was "independent," and that all the defendants failed to comply with mandatory requirements to disclose compensation received in connection with the publication of securities analysis, in violation of Section 17(b) of the Securities Act of 1933. As alleged in the complaint:
Simultaneously with the filing of the Complaint, Westergaard.com, Inc. and Westergaard Broadcasting Network, Inc. settled the charges against them by consenting, without admitting or denying the Commission's allegations, to the entry of an order permanently enjoining them from violating Section 17(b) of the Securities Act.
As to John Westergaard, the Complaint seeks a permanent injunction against violations of Section 17(b) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and civil penalties.