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1
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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
FEVI ACT EXCHANGE ACT JOHNSON COMPLAINT INTERNET FRAUD CIVIL UTAH EXCHANGE COMMISSION STOCK COMPLAINT ALLEGES DEFENDANTS TOUTING FEVI VIOLATING SUBSCRIBERS GEORGE JEREMY JOHNSON RUMORSEARCH FEVI SHARES DISCLOSE COMPENSATION THEREUNDER AMOUNTS PERMANENT DISGORGEMENT CIVIL PENALTIES INTERNET FRAUD SWEEP REPORT SUSPICIOUS ACTIVITY ENFORCEMENT ACTIONS |
7
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release. No. 16920 / February 28, 2001
, Civil Action No.201CV135C (D. Utah)
The Securities and Exchange Commission filed a civil action in federal
district court in Salt Lake City, Utah, against RumorSearch.com
("RumorSearch"), a company that purportedly researches stock rumors
for paying subscribers, based in St. George, Utah, and its principal
Jeremy Johnson ("Johnson"), age 25 and a resident of St. George, Utah.
The Complaint alleges that the defendants made false statements about
and touted the stock of Far East Ventures, Inc. ("FEVI").
According to the Complaint, in January and February 2000, Johnson
profiled FEVI as RumorSearch's Stock Pick of the Month, sent several
emails to RumorSearch subscribers and others praising FEVI and
received a total of 95,000 FEVI shares for touting FEVI. In these
touts, Johnson and RumorSearch misrepresented or omitted to disclose
material information regarding FEVI, the reliability of information
and Johnson's receipt of compensation for the touting. While touting
FEVI through his false and misleading releases, Johnson sold 66,500
FEVI shares at a profit of $315,848.
The Complaint alleges that the defendants' conduct violated the
antifraud provisions of Section 10(b) of the Securities Exchange Act
of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The Complaint
further alleges that the defendants' conduct violated Section 17(b) of
the Securities Act of 1933 ("Securities Act"). Section 17(b) of the
Securities Act makes it unlawful for any person to distribute a
publication recommending a security without fully disclosing the
nature, terms and amounts of compensation received or to be received.
The Complaint seeks permanent injunctions, disgorgement, prejudgment
interest, civil penalties, and other relief.
RumorSearch.com, Inc. ("RumorSearch") and Jeremy Johnson ("Johnson")
consented to the entry of final judgments permanently enjoining them
from violating Section 10(b) of the Exchange Act and Rule 10b-5
thereunder and 17(b) of the Securities Act, with the amounts of
disgorgement and civil penalties to be determined.
The Commission acknowledges the assistance of the National Association
of Securities Dealers ("NASD") in the investigation of this matter.
This action is brought as part of the SEC's Fifth Internet Fraud
Sweep.
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