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Wall Street Eugenics : SEC Charges Microcap Fraud . . . again

Pennies from heaven but pennystocks from hell. After some three decades lawyering on Wall Street, I ask your pardon if, at times, I come off as overly cynical, hardboiled, and curmudgeonly.  I mean, you know, seriously, if you’ve seen even a tenth of the garbage and nonsense that I have during my career, you would likely have the same grumpy demeanor.

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After some three decades lawyering on Wall Street, I ask your pardon if, at times, I come off as overly cynical, hardboiled, and curmudgeonly.  I mean, you know, seriously, if you’ve seen even a tenth of the garbage and nonsense that I have during my career, you would likely have the same grumpy demeanor.

Too much of what presently passes for securities regulation strikes me as thwarting natural selection.  Permit me the observation that some folks are just too stupid to be allowed to invest in the stock market, and it may be best for the rest of us to let them get fleeced and bankrupted — you know, take their dollars out of our genetic pool.

Harsh?  Sure. Honest? Absolutely.  As if decades of earnest securities regulation has enhanced the integrity of the stock markets and prevented generation after generation of Ponzis and Madoffs.

Fraudsters prey upon the gullible and feast upon the foolhardy. Eliminate the protections for those investors who refuse to do their own due diligence, for those who override our human instinct to disbelieve what’s too good to be true, and maybe the con artists will find it all that more difficult to scam the remaining population.  The eugenics of Wall Street.  Alas, the worst sin is to lie to one’s self — so, yeah, I understand that there’s no way such benign neglect will become the regulatory policy for the securities markets.  Still — a guy can dream, no?

An Investment For Morons

Take microcap stocks.  Please, take them – take them out to the middle of the ocean and dump them.  All of them. As if what??? Serious investors are diving into most of this pennystock crap and making a profit? Fact is, about the only folks making money on this low-priced garbage are the paid touts and the brokerage firms dumping their inventory.  No one has had to re-invent the wheel or alter the now time-tested scripts.

Someone you never met cold calls you with a wild and fancy tale about a cancer cure or the next Apple. It’s all too-good-to-be-true but, yet, you run for your checkbook and can’t wait to get into this opportunity.

Sometimes you send your dollars to the broker that you never met from the brokerage firm you never heard of for investment in a stock you didn’t research.  Other times, you think you’re smarter than everyone else.  You sort of cheat — instead of giving the order to the fast-talking salesman that first called you, you go on to your discount account at Schwab, TD Ameritrade, E*Trade. Then, months later, when the tout no longer answers his telephone or your broker’s firm has shuttered, then you cry and go running to a lawyer or a regulator.  Gimme a break!

Another Case In Point

In a January 26, 2012, press release titled: SEC Charges Boiler Room Operators in Florida-Based Penny Stock Manipulation Scheme, we learn that the Securities and Exchange Commission (“SEC”) charged a Fort Lauderdale-based firm and its founder with conducting a fraudulent boiler room scheme.  Boiler room scheme? My. . . is it still the 1980s?

SEC v. First Resource Group LLC and David H. Stern (Complaint, SDFL, 12-cv-60137-XXXX, January 26, 2012) asserts four counts alleging violations of Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  The Complaint alleges that from December 2008 through at least May 2010, defendants First Resource Group LLC and its principal David H. Stern engaged in a scheme in which they:

• fraudulently touted the stock of TrinityCare Senior Living, Inc. and Cytta Corporation (two thinly-traded microcap companies);
• sold each company’s stock at the same time they were touting it; and
• manipulated the market for each stock.

NOTE: The charges contained in the Complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty in a court of law.

Cast of Characters

• First Resource Group of Fort Lauderdale, FL, is a Florida limited liability company organized in September 2008 by Stern. First Resource has never been registered with the SEC and has not registered any offering of securities under the Securities Act. The SEC alleges that the firm’s sole business was promoting penny stocks.
• Stern, 48, Tamarac, FL, was First Resource’s sole manager and not associated with a registered broker, or dealer during the relevant period.
• Cytta Corporation‘s website offers the following explanation of its business:

We are the first Medical Health Services Provider to coordinate and verify data transmission and medical device connectivity. Our system supports Payors & Providers efforts to provide better and faster care to their patient members.

TrinityCare is a rapidly emerging growth company formed to meet the needs of senior adults, through the development and management of senior living community. These facilities will typically be in association with a local, host church, which has contributed land in exchange for ownership in the facility. In addition to the local host church, TrinityCare develops positive ministry relationships with all segments of the community, including as a significant relationship with the broad Christian community.

Also, watch this 2010 Fox Business News interview with the company’s CEO Donald M. Saupaugh:

Telemarketing

The Complaint alleges that defendant First Resource signed agreements to promote TrinityCare and Cytta’s stock, for which the firm received 150,000 shares of TrinityCare stock and 200,000 shares of Cytta stock.  From December 2008 through at least May 2010, Stern and First Resource allegedly paid telemarketers to cold-call investors and solicit them to purchase shares in the two penny stocks. These telemarketers were allegedly hired and trained by Stern, and the operation was purportedly conducted out of First Resource’s sole office (in Fort Lauderdale).

Armed with information provided to them by Stern, the telemarketers allegedly prepared sales scripts to pitch the stock to potential investors. According to the Complaint, Stern reviewed the draft versions of the scripts, made edits, and approved the final drafts before the telemarketers were allowed to use them, which were supposed to be used verbatim.

Stern gave the telemarketers a computer database list of registered representatives at broker-dealers, who were targeted for the cold calling and stock pitches.  Once an investor agreed to purchase one of the stocks, the telemarketer who solicited that investor gave Stern the investor’s name, the brokerage firm where the investor’s account was held, and the number of shares to be purchased. Telemarketers earned a modest salary and 6% sales commission on all verified purchases.

TrinityCare

From June 2009 through at least May 2010, First Resource’s telemarketers allegedly made material misrepresentations about TrinityCare’s rapid revenue growth and a projected increase in the company’s stock price; for example, that the company’s stock “is going to be $5-7 in 6-12 months” and the company “is going to be a half-a-billion dollar company in five years or roughly a $40 stock.”

Also, the Complaint alleges that Stern disseminated a research report on TrinityCare stating that, for the year ending December 31, 2009, TrinityCare would show a profit on revenues exceeding $7.2 million. First Resource’s telemarketers and the research report also claimed TrinityCare expected to add at least four newly constructed senior living facilities. It was further alleged that misrepresentations were made that TrinityCare had secured $50 million in financing commitments to construct these new facilities and that the financing was “90% backed by HUD,” (The U.S. Department of Housing and Urban Development+.

Jim Cramer Stock Watch: Jan 26th Stock Picks

Jim Cramer made the following calls on January 26th, 2012. What do you think about his picks? Time Warner Inc

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Jim Cramer made the following calls on January 26th, 2012. What do you think about his picks?

Time Warner Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $37.97, its 52-week high is $38.62, and its 52-week low is $27.62.

Staples, Inc. : Jim Cramer ranked this stock a Sell . The stock closed at $15.95, its 52-week high is $22.97, and its 52-week low is $11.94.

Netflix, Inc. : Jim Cramer ranked this stock a Sell . The stock closed at $116.01, its 52-week high is $304.79, and its 52-week low is $62.37.

Microsoft Corporation : Jim Cramer ranked this stock a Buy . The stock closed at $29.50, its 52-week high is $29.95, and its 52-week low is $23.65.

Eaton Corporation : Jim Cramer ranked this stock a Buy . The stock closed at $48.93, its 52-week high is $56.49, and its 52-week low is $33.09.

JetBlue Airways Corporation : Jim Cramer ranked this stock a Sell . The stock closed at $5.80, its 52-week high is $6.45, and its 52-week low is $3.40.

Mastercard Incorporated : Jim Cramer ranked this stock a Buy . The stock closed at $347.83, its 52-week high is $384.99, and its 52-week low is $230.31.

Walt Disney Co. : Jim Cramer ranked this stock a Buy . The stock closed at $39.35, its 52-week high is $44.34, and its 52-week low is $28.19.

Biogen Idec Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $117.85, its 52-week high is $120.66, and its 52-week low is $64.28.

Avnet Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $33.60, its 52-week high is $38.00, and its 52-week low is $23.69.

Featured Reading: These Insights into Apple’s Business Will Crack Your Skull Open>>

To contact the reporter on this story: Dave Friedman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

Jim Cramer Stock Watch: Jan 26th Stock Picks

Jim Cramer made the following calls on January 26th, 2012. What do you think about his picks? Time Warner Inc.

Continued here:

Jim Cramer made the following calls on January 26th, 2012. What do you think about his picks?

Time Warner Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $37.97, its 52-week high is $38.62, and its 52-week low is $27.62.

Staples, Inc. : Jim Cramer ranked this stock a Sell . The stock closed at $15.95, its 52-week high is $22.97, and its 52-week low is $11.94.

Netflix, Inc. : Jim Cramer ranked this stock a Sell . The stock closed at $116.01, its 52-week high is $304.79, and its 52-week low is $62.37.

Microsoft Corporation : Jim Cramer ranked this stock a Buy . The stock closed at $29.50, its 52-week high is $29.95, and its 52-week low is $23.65.

Eaton Corporation : Jim Cramer ranked this stock a Buy . The stock closed at $48.93, its 52-week high is $56.49, and its 52-week low is $33.09.

JetBlue Airways Corporation : Jim Cramer ranked this stock a Sell . The stock closed at $5.80, its 52-week high is $6.45, and its 52-week low is $3.40.

Mastercard Incorporated : Jim Cramer ranked this stock a Buy . The stock closed at $347.83, its 52-week high is $384.99, and its 52-week low is $230.31.

Walt Disney Co. : Jim Cramer ranked this stock a Buy . The stock closed at $39.35, its 52-week high is $44.34, and its 52-week low is $28.19.

Biogen Idec Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $117.85, its 52-week high is $120.66, and its 52-week low is $64.28.

Avnet Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $33.60, its 52-week high is $38.00, and its 52-week low is $23.69.

Featured Reading: These Insights into Apple’s Business Will Crack Your Skull Open>>

To contact the reporter on this story: Dave Friedman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

Jim Cramer Stock Watch: Jan 26th Stock Picks

Jim Cramer made the following calls on January 26th, 2012.

Originally posted here:

Jim Cramer made the following calls on January 26th, 2012. What do you think about his picks?

Time Warner Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $37.97, its 52-week high is $38.62, and its 52-week low is $27.62.

Staples, Inc. : Jim Cramer ranked this stock a Sell . The stock closed at $15.95, its 52-week high is $22.97, and its 52-week low is $11.94.

Netflix, Inc. : Jim Cramer ranked this stock a Sell . The stock closed at $116.01, its 52-week high is $304.79, and its 52-week low is $62.37.

Microsoft Corporation : Jim Cramer ranked this stock a Buy . The stock closed at $29.50, its 52-week high is $29.95, and its 52-week low is $23.65.

Eaton Corporation : Jim Cramer ranked this stock a Buy . The stock closed at $48.93, its 52-week high is $56.49, and its 52-week low is $33.09.

JetBlue Airways Corporation : Jim Cramer ranked this stock a Sell . The stock closed at $5.80, its 52-week high is $6.45, and its 52-week low is $3.40.

Mastercard Incorporated : Jim Cramer ranked this stock a Buy . The stock closed at $347.83, its 52-week high is $384.99, and its 52-week low is $230.31.

Walt Disney Co. : Jim Cramer ranked this stock a Buy . The stock closed at $39.35, its 52-week high is $44.34, and its 52-week low is $28.19.

Biogen Idec Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $117.85, its 52-week high is $120.66, and its 52-week low is $64.28.

Avnet Inc. : Jim Cramer ranked this stock a Buy . The stock closed at $33.60, its 52-week high is $38.00, and its 52-week low is $23.69.

Featured Reading: These Insights into Apple’s Business Will Crack Your Skull Open>>

To contact the reporter on this story: Dave Friedman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

Stock Futures Rise Ahead of GDP Report

NEW YORK (TheStreet) — U.S. stock futures were signaling a positive open Friday as investors awaited data expected to show that the U.S. economy grew in the fourth quarter.

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NEW YORK (TheStreet) — U.S. stock futures were signaling a positive open Friday as investors awaited data expected to show that the U.S. economy grew in the fourth quarter.

Futures for the Dow Jones Industrial Average were rising 8 points, or 11.3 points above fair value, at 12,692. Futures for the S&P 500 were up 0.9 points, or 1.8 points above fair value, at 1316, and futures for the Nasdaq adding 4.2 points, or 6.3 points above fair value, at 2457.

Stocks dropped Thursday as disappointing housing numbers and weak jobless data overshadowed strong earnings from a handful of corporate heavyweights. On Friday at 8:30 a.m. EST, the Bureau of Economic Analysis is scheduled to provide its report on the total output of goods and services in the U.S. during the fourth quarter. Gross domestic product probably came in at 3.1%, an improvement from 1.8% in the third quarter, according to economists polled by Thomson Reuters. Other data Friday includes the University of Michigan consumer sentiment index for January at 9:55 a.m. Economists expect the final reading to remain unchanged at 74.
London’s FTSE was slipping 0.14%, and Germany’s DAX was up 0.30%. In Asia, Japan’s Nikkei Average closed lower by 0.09%. Hong Kong’s Hang Seng index finished higher by 0.31%. In corporate news, Starbucks’(SBUX) outlook for fiscal 2012 came in short of the consensus view. The Seattle-based coffee seller said it expects earnings of $1.78 to $1.82 a share for the full year, slightly below analysts’ expectations for profit of $1.83 a share. The company said it expects “unfavorable” commodity costs to impact results this year with the brunt of the impact coming in the first half of the year. Juniper Networks(JNPR) reported worse-than-expected fourth-quarter earnings and issued weak first-quarter guidance. Juniper reported fourth-quarter earnings of 28 cents a share on revenue of $1.12 billion. Wall Street analysts expected Juniper to earn 28 cents on $1.126 billion in revenue. First-quarter guidance was weaker than Wall Street analysts were anticipating, as customer spending continues to be sluggish. Juniper expects first-quarter revenue of between $960 million and $990 million and earnings of 11 cents to 14 cents a share. Wall Street analysts expected $1.1 billion in revenue and 26 cents in earnings, according to Yahoo! Finance. Biotech company Amgen(AMGN) said fourth-quarter profit fell 8.5% as expenses for taxes and for producing and selling drugs rose faster than revenue. Amgen reported net income of $934 million, or $1.08 a share, down from $1.02 billion, or $1.08 a share, a year earlier. On an adjusted basis, Amgen said it earned $1.04 billion, or $1.21 a share; analysts were expecting adjusted propfit of $1.22 a share. Revenue rose 3% to $3.97 billion. Analysts expected revenue of $3.92 billion. A federal judge on Thursday ruled that Transocean(RIG)is shielded from paying out certain claims against it stemming from the massive oil spill in the Gulf of Mexico in April 2010 because of its contract with BP(BP). March oil futures were up 47 cents to $100.17 a barrel, while February gold futures were off $1.60 to $1,725.10 an ounce. The benchmark 10-year Treasury was falling 5/32, raising yield to 1.954%, while the U.S. dollar index was falling 0.3% to $79.15. – Written by Andrea Tse in New York. >To contact the writer of this article, click here: Andrea Tse.>To order reprints of this article, click here: Reprints

Viadeo vies for Arab expansion with Moroccan branch (Reuters)

RABAT (Reuters) – Viadeo, the world’s second-biggest online networking site for professionals after LinkedIn, said on Friday it had opened a regional branch in Morocco as it seeks to expand its presence in the increasingly-wired Arab world. Viadeo, which targets professionals, job seekers and recruiters, shelved plans for an initial public offering last year to focus on growth in emerging markets. “Morocco is the first country in Northern Africa and within the Arab world where Viadeo has established an office; this follows the opening of an office in Senegal in March 2011,” Viadeo said in a statement

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RABAT (Reuters) – Viadeo, the world’s second-biggest online networking site for professionals after LinkedIn, said on Friday it had opened a regional branch in Morocco as it seeks to expand its presence in the increasingly-wired Arab world.

Viadeo, which targets professionals, job seekers and recruiters, shelved plans for an initial public offering last year to focus on growth in emerging markets.

“Morocco is the first country in Northern Africa and within the Arab world where Viadeo has established an office; this follows the opening of an office in Senegal in March 2011,” Viadeo said in a statement.

Morocco accounts for a quarter of Viadeo’s 2 million members in Africa. The increasing use of Internet and high youth unemployment in the Arab world, which hovers around 30 percent in Morocco, is a boon for businesses like Viadeo.

“The membership base in Morocco has doubled in less than a year and represents the second French speaking community of the platform after France,” it said.

(Reporting By Souhail Karam; Editing by Jon Loades-Carter)

Evi tops Android Apps of the Week (Appolicious)

There’s been a second wave of Siri clones on the rise this week, with the launch of Evi gaining plenty of attention. While Android users seek their own version of the popular iPhone 4S artificial intelligence assistant, Evi, SimSimi and others have continued to gain traction in the Android Market

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There’s been a second wave of Siri clones on the rise this week, with the launch of Evi gaining plenty of attention. While Android users seek their own version of the popular iPhone 4S artificial intelligence assistant, Evi, SimSimi and others have continued to gain traction in the Android Market. Lookout Labs unveiled a great app for visualizing mobile security threats, giving you deeper insight to malware behavior over time. Apartments.com also broke out with an Android app this week, joining the top real estate resources in the Market.

Evi’s taken the world by storm with an artificial intelligence app to help you “talk” to the internet. It’s a free search app that looks for matching results and shows you relevant websites, adding a layer of context to your query. The more you ask, the more Evi will learn, providing an increasingly improved set of search results. This Android app is really a decision aid, interfacing between you and your web search with support for natural language for speech recognition. It’s most helpful for things like local search, enabling shoppers and foodies alike. Evi is one of many Siri alternatives to hit the market lately, marking the latest wave of AI tools. Evi won’t help you schedule appointments or send text messages, as Siri does, but it’s a playful novelty for Android users.

From mobile security provider Lookout, the new Mobile Threat Tracker is a fresh way to see mobile threats across time and space. Hailing from Lookout Labs’ experimental minds, the Mobile Threat Tracker graphs malware peaks for various regions across the globe, showing historic data as well. You can see what time of day, week or year a mobile threat is likely to hit, and what regions are the most targeted. It’s all done in an artful way, making for an interactive app to educate consumers on mobile malware behavior. Lookout’s always seeking ways to inform and alert mobile users, and this creative Android app is a timely entrant to the Market.

In the market for a rental instead of buying a home? There’s an Android app for that. Apartments.com has finally delivered its core search technology in the convenience of a mobile app, delivering instant access to thousands of apartment listings in the US. Peruse condos, townhomes and houses for rent, with GPS integration for local finds. Filter your search by price, location, number of bedrooms and bathrooms, amenities and more. You’ll also see photos, floorplans and sometimes video walkthroughs of a listing, saving you time and money in the end. Save the searches you like for later access, and share them with your roomie to keep everyone on the same page.

Some things just go well together, like peanut butter and jelly. Mobile navigation apps and urban settings are perfectly suited for each other, taking the stress out of traveling mass transit systems for you. Embark, previously known as Pandav, is a prime example of how an app can consolidate, deliver and even customize mass transit data on your behalf. The free Android app has provided over 20 million trips for urbanites, boasting 2,000 new users every day. With transit tools for twelve major cities, the most recent being Boston, Embark works above and underground to provide the fastest routes to your destination, alerting you of any delays. You can create an entire trip using Embark, share them with friends (group meet ups or tourists), and interactive maps to help you get to where you’re going.

The latest security app for Android, Comodo provides one-touch virus scans and the option to run a virus scan on demand. You’ll get scans for every file and app you download to your Android device, and a “health check” feature to detect unsafe settings. You can even block annoying text messages by keyword, or set up a private “area” on your phone to keep protected data such as contacts, phone numbers and text messages. Android’s a popular target for malware attacks, and there’s a slew of security apps to choose from. Comodo packs in quite a bit for free.

The task managers to challenge all other task managers, Producteev sets out to combine your to-do list with the tools you need to manage, track and share your tasks. The key to Producteev is its integration with other services, from the expected (Google Calendar) to the specialized (AIM). You can send and discuss tasks over chat, SMS and email, and you can even outsource your tasks directly to TaskRabbit. Producteev is all about the cloud, syncing your tasks and their integrated services across mobile and web platforms, smartphones and desktops. But what makes Producteev really stand out is its ability to help you get it all done.

Create a list of your favorite Android apps of the week right here.