According to a recent press release, the defendants profited by selling penny stocks while they publicized those shares on www.pennystockchaser.com. Investors could sign up to receive daily stock alerts from the Web site via e-mail, text message, Twitter, and Facebook.
The defendants, Carol McKeown and Daniel Ryan, “used all the modern methods to communicate with investors including the PennyStockChaser website, email, text messages, Facebook, and Twitter, yet failed to adequately communicate that their rosy predictions for touted stocks were accompanied by their sales of those very same stocks,” said Eric Bustillo, Director of the SEC’s Miami Regional Office.
The SEC claims that McKeown and Ryan have touted American microcap companies since at least April 2009, and received millions of shares from those companies as compensation. The defendants sold those shares on the open market even as they announced predictions of massive price increases through the available social media networks. This practice, best known for its place outside crowded performance arenas, is known as “scalping.”
The SEC has also obtained an asset freeze against their two companies, Downshire Capital Inc. and Meadow Vista Financial Corp., through which they received the shares.
The SEC’s complaint also alleges that McKeown, Ryan, and one of their corporations failed to disclose the full amount of the compensation they received for publicizing stocks on PennyStockChaser. The complaint, filed in the U.S. District Court for the Southern District of Florida, claims that they received at least $2.4 million in sales from this scheme.
The Commission seeks a preliminary injunction and a permanent injunction against the defendants, as well as the disgorgement of ill-gotten gains plus prejudgment interest and the imposition of a financial penalty, penny stock bars against the individuals, and the repatriation of assets to the United States.