UNITED STATES OF AMERICA
SECURITIES EXCHANGE ACT OF 1934
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted against Lloyd E. Wollmershauser (the "Respondent" or "Wollmershauser") pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act").
In anticipation of the institution of these administrative proceedings, Respondent has submitted an Offer of Settlement ("Offer"), 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 in which the Commission is a party, and without admitting or denying the findings herein, except that he admits the jurisdiction of the Commission over him and over the matters set forth herein, Respondent consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (the "Order") by the Commission.
Accordingly, IT IS ORDERED that proceedings pursuant to Section 15(b) of the Exchange Act be, and hereby are, instituted.
On the basis of this Order and the Offer submitted by the Respondent, the Commission finds1 that:
A. Wollmershauser, age 55, resides in Eastlake, Ohio, and was the sole proprietor and operator of PennyStockMan, an Internet web site and newsletter service primarily devoted to microcap (penny) stock recommendations and trading techniques. Acting through his PennyStockMan web site, newsletters, and private e-mails, Wollmershauser provided investment advice for compensation as part of a regular business from approximately April 1999 to July 2000. Wollmershauser's clients paid him to receive his Internet newsletters, to access a "members-only" portion of his PennyStockMan web site and to receive private e-mails answering their trading questions. Through these media, Wollmershauser provided his clients with, among other things, instructions and advice regarding trading securities and recommendations to buy, sell, or hold penny stocks. Wollmershauser was an investment adviser as defined in Section 202(a)(11) of the Investment Advisers Act of 1940 ("Advisers Act");
B. Thermotek International, Inc. ("TTKI") is a Delaware corporation based in Burlington, Iowa. TTKI claims to have developed technology that takes organic substances from waste and converts them into useable products such as fuel, charcoal, and electricity. To date, TTKI has not installed or used the technology in any facility for any sustained period of time and has not realized any revenues from it. In October 1998, TTKI entered into a reverse merger agreement with a public shell corporation and on June 28, 2000 TTKI began trading in the over-the-counter market with market makers published in the National Quotation Bureau pink sheets. TTKI's stock is a penny stock within the meaning of Sections 15(b)(6) and 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder;
C. On March 16, 2001, the U.S. District Court for the Northern District of Ohio, Eastern Division, permanently enjoined Wollmershauser from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act. Wollmershauser was ordered to pay disgorgement of $436,660, but, based on Wollmershauser's demonstrated financial inability to pay the entire disgorgement or any civil penalty, the disgorgement in excess of $205,000 was waived by the Commission and no civil penalties were imposed.
D. The injunction was based on the Commission's allegations that between March and June 2000, Wollmershauser obtained 2,016,000 shares of TTKI stock from the issuer and, during the same period, touted TTKI stock to his advisory clients in his PennyStockMan web site, newsletters, and in private e-mails. The Commission alleged that Wollmershauser falsely stated to his advisory clients that he had inside information allowing him to project TTKI's price; that the TTKI stock price would likely rise to $20 by the end of the first day of trading; that he had made arrangements with the issuer to give his clients the opportunity to buy TTKI stock before the general public knew it was trading; that he believed TTKI was a good investment based upon his independent research; and that he was "long on TTKI" and did not intend to sell shares of TTKI stock that he owned in the short term. The Commission further alleged that Wollmershauser recommended that his advisory clients place limit buy orders at a specific price but, failed to inform them that he held over two million shares of TTKI stock, that he intended to sell, and that he placed limit sell orders for over one million shares of TTKI stock that were calculated to take advantage of his advisory clients' limit buy orders. On June 28 and June 29, 2000, the first two days of trading in TTKI stock, the price of TTKI stock rose to a high of $7.00 per share with 455,031 shares traded. On these same dates, while his advisory clients bought TTKI stock based upon his recommendation, Wollmershauser sold 97,750 shares for proceeds of $436,660. The price of TTKI stock on June 29, 2000 then fell to $1.50 per share and shortly thereafter fell again to below $1.00 per share.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Respondent's Offer.
Accordingly, IT IS ORDERED that pursuant to Section 15(b)(6) of the Exchange Act, Respondent be, and hereby is, barred from participating in any offering of a penny stock including: (i) acting as a promoter, finder, consultant, or other person who engages in actions with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or
By the Commission.
1 The findings herein are made pursuant to Respondent´s Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.