November 17, 2016: On Monday, the SEC announced that it had instituted Cease and Desist proceedings against Alexander Kon, the owner of 007StockChat.com and affiliated newsletters like AwesomeStockTips.com.
Kon, who insists that his picks are based on chart analysis rather than the fees he receives, has been accused by the regulator of Konning the public by conspiring with Michael Cummings, the CEO of Canabusiness Group, Inc. (CBGI) to hide the fact that the company had itself hired Kon to promote the intrinsically worthless shares of CBGI.
According to the SEC, Kon and Cummings, through a series of emails and phone calls, had agreed to a fee of $25,000 to be paid to Kon for the promotion. In spite of Kon billing Cummings directly and his receipt of payment from Cummings himself, Kon's newsletters claimed that the promotion was paid for by a third party, identifying Casey Cummings as that third party. The required disclaimer did not identify Casey as being the son of the elder Cummings, and moreover, falsely identified Casey as a third party, in violation of Section 17(b) of the Securities Act.
The SEC's complaint underscores the ongoing problem of promoters that obfuscate the actual identity of the people who pay them. Often, conjured up people or corporations are named as the financier of pump and dump campaigns. In this case, however, Kon and Cummings' shoddy cover-up likely led to the undoing of the scam. CBGI was suspended from trading by the SEC just a few weeks into the scheme and continues to languish on the grey sheets, in spite of Cummings' denial of an understanding of the circumstances that led to the suspension and a promise that the company would continue its operations. In the meantime, Kon continues to tout valueless companies and runs an online chat room filled with his shills.
|CBGI Chart March - April 2014|
The CBGI scheme is evident in the run up and subsequent dumping of the stock over the months of March and April of 2014. Fools were deluded into supporting a better than $90 million market cap, in spite of the fact that the company reported having no real assets and limited operations. The hype created by the 007StockChat promo fueled the trading volume necessary for Cummings and his cohorts to continue dumping their shares.
CBGI was just one of several issuers that managed to abscond with dupes' funds prior to an SEC declaration of "Whoa Nelly". Other tickers halted during the slew of SEC investigations of pretend marijuana stocks included PHOT, FITX and FSPM. With the resurgence of interest in marijuana penny stocks that seem to be little more than opportunities for insiders to capitalize on the hype, we advise caution to those seeking investment opportunities in those companies including MRPHF, MCOA, VMNT, LBTD, FUTL, MSRT and CVSI, all of which seem to be little more than subjects of pump and dump schemes. The SEC has previously issued an advisory regarding the promotion of such phony baloney companies and any of these tickers could be the subject of a trading suspension at any time, just as shares of MarilynJean Interactive (MJMI) were earlier this year.
» Related: MJMI Leaves Dupes in the Dust
» Related: Bill Chaaban Out On Three Pitches