U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release. No. 16920 / February 28, 2001
SECURITIES AND EXCHANGE COMMISSION V. RUMORSEARCH.COM, INC. AND JEREMY JOHNSON, Civil Action No.201CV135C (D. Utah)
The Securities and Exchange Commission filed a civil action in federal district court in Salt Lake City, Utah, against RumorSearch.com ("RumorSearch"), a company that purportedly researches stock rumors for paying subscribers, based in St. George, Utah, and its principal Jeremy Johnson ("Johnson"), age 25 and a resident of St. George, Utah. The Complaint alleges that the defendants made false statements about and touted the stock of Far East Ventures, Inc. ("FEVI").
According to the Complaint, in January and February 2000, Johnson profiled FEVI as RumorSearch's Stock Pick of the Month, sent several emails to RumorSearch subscribers and others praising FEVI and received a total of 95,000 FEVI shares for touting FEVI. In these touts, Johnson and RumorSearch misrepresented or omitted to disclose material information regarding FEVI, the reliability of information and Johnson's receipt of compensation for the touting. While touting FEVI through his false and misleading releases, Johnson sold 66,500 FEVI shares at a profit of $315,848.
The Complaint alleges that the defendants' conduct violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The Complaint further alleges that the defendants' conduct violated Section 17(b) of the Securities Act of 1933 ("Securities Act"). Section 17(b) of the Securities Act makes it unlawful for any person to distribute a publication recommending a security without fully disclosing the nature, terms and amounts of compensation received or to be received. The Complaint seeks permanent injunctions, disgorgement, prejudgment interest, civil penalties, and other relief.
RumorSearch.com, Inc. ("RumorSearch") and Jeremy Johnson ("Johnson") consented to the entry of final judgments permanently enjoining them from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and 17(b) of the Securities Act, with the amounts of disgorgement and civil penalties to be determined.
The Commission acknowledges the assistance of the National Association of Securities Dealers ("NASD") in the investigation of this matter.
This action is brought as part of the SEC's Fifth Internet Fraud Sweep.
For tips on how to avoid Internet investment schemes, visit http://www.sec.gov/investor/pubs/cyberfraud.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 Fraud Sweep, visit http://www.sec.gov/news/press.shtml.http://www.sec.gov/litigation/litreleases/lr16920.htm