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PDFThe Alberta Securities Commission has issued a cease-trading order for TSHO’s stock, while banning Skymark from trading or recommending any securities, after uncovering tell-tale signs of a classic pump-and-dump scheme. When explaining its move on Monday, the ASC cited concerns originally raised by TheStreetSweeper in a detailed investigative report almost six months ago. (Click here for the original story, complete with links to backup documents.)
Specifically, the ASC claimed that TSHO had soared on bullish Skymark forecasts secretly generated by relatives connected to the company. The ASC also noted that John Kirk, the sole director of Skymark and the son of TSHO’s founder, “held a significant number of shares” in the company – as did TSHO founder Bruce Kirk himself – at the time of the stock-boosting promotions. It pointed out that Ben Kirk, another son of the founder, worked for Skymark during the publicity campaign as well.
In addition, the ASC cited Skymark for the following potential violations of Alberta securities laws: portraying itself as an “independent” research firm when it actually received payments, from unidentified sources, for its TSHO recommendations; using fine print to disclose that compensation when it chose to report the payments at all; failing to state material risks associated with investing in TSHO’s stock; and issuing unfounded predictions that TSHO was “on the verge of a major breakout in the very near future” that could deliver “massive returns” to investors.
As previously noted by TheStreetSweeper, TSHO fetched mere pennies on light volume until Skymark initiated bullish coverage of the stock. After that, however, TSHO soared past $1.50 a share – with millions of shares changing hands – earlier this year. The stock peaked at $1.62 in February, triggering an in-depth story by TheStreetSweeper a few weeks later, and has since plummeted to less than a quarter a share. The stock, still trading here in the U.S., tumbled another 30% to 16 cents a share on Tuesday followings news of the regulatory setback.
Ironically, one of Skymark’s loudest fans issued a ringing endorsement of TSHO that – in hindsight – now looks like a prescient warning instead.
“We have a real company working on a real project with a potential revenue source that makes sense (for) its stock price,” he insisted at the time. “Promotion equals exposure.
“And that’s a good thing,” he added, “just so long as promotion isn’t the only thing supporting a company’s stock price.”
All told, Factiva’s extensive news database shows, Skymark issued hundreds of press releases – many of them on speculative penny stocks – since the firm first registered its website about 14 months ago. (Notably, Factiva records show, Skymark chose to kick off its promotions with “complimentary” research coverage of SpongeTech (OTC: SPNG.PK) – a company since hit with criminal charges for allegedly orchestrating its own pump-and-dump scheme – during the trading frenzy that led up to that stock’s looming halt.) That number excludes any companies, such as TSHO, that Skymark chose to tout through paid mailers instead.
Two in a Row
The ASC crackdown on Skymark comes less than two months after regulators took aim at another stock promoter exposed by TheStreetSweeper.
In late June, the U.S. Securities and Exchange Commission filed charges against PennyStockChaser and its owners for allegedly “selling millions of shares” in the same stocks that it was urging investors to buy. In total, the SEC estimated, the defendants pocketed at least $2.4 million from their so-called stock-scalping scheme.
When TheStreetSweeper originally examined PennyStockChaser back in November, it calculated that the website had already received almost 200 million free trading shares – after just seven months of operation – in the companies it was paid to tout. As it turns out, however, the firm apparently received even more stock than it actually disclosed.
The SEC now claims that PennyStockChaser collected far more shares of Atlantic Wind & Solar (OTC: AWSL.PK) and MSE Enviro-Tech (OTC: MEVT.PK) – the very companies scrutinized in TheStreetSweeper’s past coverage of the website – than it reported to the public. Through related entities, the SEC says, PennyStockChaser sold almost 900,000 shares in the two companies while promoting those same stocks.
AWSL, which peaked near $5 on that paid publicity, now fetches just $1.55 a share. MEVT has fared even worse, plummeting from $1.30 to just 7 cents and sometimes barely trading at all.
PennyStockChaser apparently scored big gains on those two stocks before they crashed back to earth. Of the $2.4 million that the firm allegedly generated from its scalping scheme, SEC figures indicate, roughly $1 million came from sales of AWSL and MEVT alone.
The SEC has since frozen PennyStockChaser’s assets, however, and is seeking full disgorgement of any ill-gotten returns. It plans to secure penny-stock bars against the firm – which liked to promote itself as the most popular website for “hot penny stock tips” – and its owners as well.
* To contact Melissa Davis, the author of this story, please send an email to editor@thestreetsweeper.org.
