UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16680/ September 6, 2000
SECURITIES AND EXCHANGE COMMISSION v. TORSTEN PROCHNOW D/B/A/ STOCKREPORTER.DE, DENNIS C. HASS AND WORLD OF INTERNET.COM AG C00-3199-MJJ (USDC N.D. Calif.)
The Securities and Exchange Commission announced today that it filed a federal court action in San Francisco against three residents of Germany, Torsten Prochnow ("Prochnow") d/b/a Stockreporter.de, Dennis C. Hass ("Hass") and World Of Internet.com AG ("WOI"). The Commission's complaint alleges that from at least June 1999 through the present, Prochnow and Hass, through WOI, a private German corporation they own, have touted the stocks of approximately 64 United States public companies under the name Stockreporter.de. The complaint further alleges that the touts have been disseminated through postings on Stockreporter.de's Internet website, which may be viewed in both the English and German languages, and numerous press releases. Moreover, the complaint alleges that during different time periods the website contained false statements that Stockreporter.de's principals both had "long-term" trading intentions and were not compensated for their touting, as well as baseless financial projections concerning one of the touted companies. According to the complaint, during various periods both the website and press releases failed to disclose both the nature and source of such compensation as well as the defendants' personal stock sales shortly after the touting, which caused the price and trading volume of the stock of certain companies to increase significantly in the short term. The complaint alleged that on at least 15 occasions, the defendants sold their holdings of the touted stocks into the inflated market they created, thereby realizing profits of $111,530. This action is part of the fourth nationwide Internet fraud sweep conducted by the Commission since October 1998.
The Commission's complaint alleges that Prochnow, Hass and WOI violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(b) of the Securities Act of 1933. The Commission seeks disgorgement, a permanent injunction and civil penalties. Without admitting or denying the Commission's allegations, the defendants have consented to the entry of an order that would enjoin them from future violations of the foregoing provisions and disgorge $111,530 plus $6,414 in prejudgment interest and would require Prochnow and Hass each to pay a $50,000 civil penalty.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.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 Market Manipulation Sweep, visit http://www.sec.gov/news/extra/intmm.htm.