SEC BRINGS FRAUD CHARGES AGAINST FORMER CBS MARKETWATCH COLUMNIST THOM CALANDRA FOR ILLEGAL TRADING SCHEME
FOR IMMEDIATE RELEASE
Washington, D.C., Jan. 10, 2005 - The Securities and Exchange Commission today brought and settled civil fraud charges against Thom Calandra, a former columnist for the Internet website CBS MarketWatch.com. The Commission alleges that Calandra profited by secretly selling stocks shortly after his investment newsletter's positive recommendations of the stocks caused their prices to rise. In settling the matter, Calandra, who lives in Sausalito, California, will pay over $540,000 in disgorgement and penalties.
Helane L. Morrison, District Administrator of the SEC's San Francisco Office, stated, "Calandra betrayed his readers' trust by surreptitiously using his newsletter, The Calandra Report, to bolster his personal trading profits. Calandra's readers were entitled to know about his trading activity, so that they could evaluate the credibility and impartiality of Calandra's investment advice for themselves."
According to the Commission's complaint, filed in the Northern District of California, Calandra made over $400,000 in illegal profits through a practice known as "scalping"-buying shares of thinly-traded, small-cap companies, writing highly favorable newsletter profiles recommending the companies to his newsletter subscribers, and then selling the majority of his shares when the increased demand generated by his favorable columns drove up the stock price. From March to December 2003, Calandra followed this "Buy-Write-Sell" pattern for 23 different stocks that he covered in The Calandra Report, without disclosing his actions to his readers.
In addition, the Commission alleged that Calandra failed to tell his readers that he had received compensation from a stock promoter affiliated with two mining companies that Calandra profiled in The Calandra Report. The compensation took the form of heavily-discounted shares in the two companies-shares which Calandra later sold at a substantial profit after the stock prices rose following his favorable newsletter write-ups.
"Calandra's violations were serious, but the penalty amount reflects Calandra's cooperation with the staff's investigation," said Marc J. Fagel, Assistant District Administrator of the SEC's San Francisco Office.
Calandra, without admitting or denying the allegations in the Commission's complaint, has agreed to a permanent injunction from further violations of the antifraud provisions of the federal securities laws. Calandra also will disgorge $416,109.58 in illegal trading profits and prejudgment interest and will pay a civil penalty of $125,000.
For more information, contact:
Helane L. Morrison
Marc J. Fagel
Assistant District Administrator
United States Securities and Exchange Commission
San Francisco District Office