The allegations included Section 17B violations:
According to the SEC’s complaint filed in federal court in Manhattan, the newsletters published by Thompson, Fung, and Van Nguyen misleadingly stated that they “may” or “might” sell shares they owned when in reality their intentions always were to sell the stocks they were promoting. In fact, in some instances they already were selling the stocks to which they were saying “may” or “might” sell. They also failed to fully disclose in their newsletters the amounts of compensation they were receiving for promoting the stocks, cloaking the fact that they were coordinating their promotion of the penny stocks to deliberately increase the prices and dump their own shares.
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It is important to note that saying you might sell the stock you owned is not enough when you always intended to sell and it is not enough when you are actually selling.
The SEC also alleges that these folks failed to FULLY disclose compensation for promotion, cloaking the fact that they were coordinating in the promotion to deliberately increase the price and dump their own shares.
