SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16230/August 2, 1999
Securities and Exchange Commission V. Janson Capital, Inc., et al., Civil Action No. H-99-2463
The Securities and Exchange Commission ("Commission") announced today that it filed a Complaint in the United States District Court in Houston, Texas against Janson Capital, Inc., ("Janson Capital"), and its two principals, Jan E. Bonner ("Bonner") and Robert A. Klutts ("Klutts"). Janson Capital, Bonner and Klutts are the publishers of an investment newsletter named, Angels Stock Watch ("ASW"), which publishes profiles of various "microcap" companies whose securities are traded in the over-the-counter market.
Janson Capital is a Texas corporation based in Houston that was formed in August 1998
Bonner, age 41, of Houston, Texas, is the president and 50% owner of Janson Capital. Bonner participated in producing and disseminating the ASW newsletter.
Klutts, age 46, of Houston, Texas, is vice president and 50% owner of Janson Capital. Klutts participated in producing and disseminating the ASW newsletter.
According to the Commission's complaint, the ASW newsletter is promotional in tone, speaks of the featured companies in glowing terms, and encourages readers to purchase the securities of those companies. The Commission's complaint alleges that Janson Capital has disseminated up to 400,000 copies of the ASW newsletter through unsolicited faxes and e-mails, known as "spams." However, in three instances in late 1998, the newsletter did not disclose that Janson Capital had agreements with the featured companies under which it would receive compensation including both cash and stock for touting their securities. In addition, the complaint charges that the ASW newsletter was misleading because it represented that the newsletter's publisher was an independent firm when, in fact, the newsletter was little more than a paid promotional piece. Further, the complaint charges that the recommendation that ASW's readers purchase stock in the featured companies was misleading because Janson Capital, Bonner and Klutts, in a fraudulent practice known as "scalping," were simultaneously selling shares of the same stocks.
The defendants' false and misleading statements regarding their independence, and their scalping activities, are alleged to have violated the antifraud provisions found in Section 17 (a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5 thereunder. Additionally, their failure to disclose the receipt of cash and/or shares in the companies they promoted as compensation, is alleged to have violated the antitouting provisions contained in Section 17(b) of the Securities Act. The Complaint seeks a permanent injunction against Janson Capital, Bonner and Klutts, as well as civil penalties. Janson Capital, Bonner and Klutts have offered to simultaneously settle the case under terms in which they would consent, without admitting or denying any wrongdoing, to permanent injunctions and to each pay a penalty of $5,000.