James Sheret, Jr. and Glenn E. Conley

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16451 / February 24, 2000

SECURITIES AND EXCHANGE COMMISSION v. JAMES SHERET, JR. AND GLENN E. CONLEY, No. CIV 1411 (AGS) (USDC S.D.N.Y.)

The Commission announced the filing of an action against two people who are charged with having sent numerous unsolicited e-mail messages, commonly known as "spams," to fraudulently manipulate the stock price of 57 thinly-traded companies. The Commission's complaint alleges that James Sheret, Jr., of Bayside, New York, and Glenn E. Conley, of Portland, Oregon, prepared the spams, under the banner "AOL Investment Snapshot," thus making it appear that the spams emanated from or were endorsed by America Online, Inc. The complaint further alleges that Sheret and Conley sold their personal holdings in the stocks immediately after sending the spams, realizing substantial profits.

The complaint alleges that, in addition to creating the false impression that the spams were sent by AOL, in some instances the spams were written as if the intended recipient was a friend of the sender, creating the false impression that the spams were sent to the recipient by mistake. Further, the spams stated that the stock prices of the touted companies had recently increased without disclosing that, in a number of instances, the price increases were due largely to Sheret's and Conley's stock purchases before the spams were sent.

These false and misleading statements were allegedly intended to induce buying in the stocks and raise their prices. Indeed, the scheme had this effect, allowing Sheret and Conley to sell their holdings into an artificially inflated market. The complaint alleges that Sheret and Conley have made profits of at least $309,705 and $21,990 through individual trading, respectively, and another $7,627 through trading in a joint account.

The complaint, filed in the U.S. District Court for the Southern District of New York, charges Sheret and Conley with violating Section 10(b) of the Securities Exchange Act of 1934 and seeks permanent injunctions, disgorgement and civil penalties. The action also seeks an order temporarily restraining Sheret and Conley from violating the federal securities laws and freezing their assets.

The Commission appreciates the assistance provided by American Online, Inc. in this matter.