UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16532 / May 1, 2000
SECURITIES AND EXCHANGE COMMISSION v. STEPHEN HOURMOUZIS AND WAYNE LOUGHNAN, Civ. No. 00-N-905 (USDC D. Colo.) The Commission announced today that it filed a federal court action against two Australian residents who used the Internet to falsely tout the stock of Rentech, Inc., a Denver company, to millions of investors in the United States and abroad. The Commission's complaint names as defendants Stephen Hourmouzis and Wayne Loughnan and alleges that between May 7 and 10, 1999, Hourmouzis and Loughnan sent between six and seven million e-mails to United States citizens, and others, and posted numerous messages on the message boards of Yahoo!, Raging Bull, and InsidetheWeb.com. The messages were masked and made to appear as though written by analysts. According to the Commission's complaint, the messages contained false statements, including that analysts predicted a 900% rise in Rentech's stock price and that Rentech had new, patented technology scheduled for release. The Commission alleges that the messages caused the price of Rentech's stock to double and trading volume to increase by 1,600 percent on May 10, 1999 and, as a result, Nasdaq halted trading. According to the complaint, Hourmouzis and Loughnan sold their stock in Rentech after disseminating the false information, realizing approximately $14,000 in profits.
The Commission's action, filed in the U.S. District Court in Denver, Colorado, alleges that Hourmouzis and Loughnan violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks disgorgement and a temporary and permanent injunction to prohibit Hourmouzis and Loughnan from violating the antifraud provisions of the federal securities laws.
The Commission's action is a result of international cooperation and coordination. The Australian Securities and Investment Commission, which recently filed its own criminal action against Hourmouzis and Loughnan, greatly assisted the Commission in its investigation. The Commission also wishes to thank the British Columbia Securities Commission for its assistance in this matter.