03
Feb
10

A.01 Internet Problem (Worksheet 5)

Shelly Huzaynah 21207019

SMAK01-7

Auditing 2

Question :

1.  What allegedly occurred according to the complaint underlying LR No. 18487?

Answer :

The Securities and Exchange Commission announced today that on November 24, 2003, the Honorable George B. Daniels of the United States District Court for the Southern District of New York permanently enjoined defendant Billy Blackwelder (“Blackwelder”) from violating the antifraud, anti-touting and other provisions of the federal securities laws, barred him from participating in an offer of penny stock, and ordered him to disgorge his illicit profits.

Question :

2.  What section(s) of federal securities laws was the primary named individual, Billy Blackwelder, accused of violating?

Answer :

The Complaint alleges that Blackwelder prepared and arranged to have issued at least one false press release announcing a major licensing deal for STWA that, in fact, did not exist. Blackwelder also posted positive messages about STWA on an Internet stock message board without disclosing, as required, that he received shares of STWA as payment for the promotion. Blackwelder’s postings were materially misleading because they created the impression that Blackwelder was expressing unbiased views about STWA and its stock, when he was actually a paid promoter.

Source :

http://www.sec.gov/litigation/litreleases/lr18487.htm


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