SEC Suspends Hi Score and OLIE After Janice Shell Research Report
On January 27, 2014, the Securities and Exchange Commission ( the “SEC”) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of OLIE, Inc. (“OLIE”), of Vancouver, Canada, and of Hi Score Corp. (“Hi Score”), of Sunrise, Florida, commencing at 9:30 a.m. EST on January 27, 2014, and terminating at 11:59 p.m. EST on February 7, 2014. The SEC temporarily suspended trading in OLIE and Hi Score due to a lack of current and accurate information about the companies. It is not yet known whether the suspension will be followed by an SEC Enforcment action.
The suspension came more than a month after Janice Shell, an investigative journalist for PumpsAndDumps.com, published a research report questioning the disclosures made by OLIE as well as its issuances of unregistered securities.
The SEC apparently agreed with Ms. Shell. The SEC stated that there are questions regarding the accuracy of publicly available information about both companies’ assets, acquisitions, business activities, control persons, securities offerings, and financing arrangements.
In its announcement, the SEC cautioned brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Over the past decade, private individuals often beat the SEC to the punch, conducting their own investigations of public companies often well before an SEC enforcement action is pursued.
In this instance, HSCO and OLIE were examined and analyzed more a month ago by Ms. Shell in a research report published by http://www.pumpsanddumps.com/2013/12/the-oliephant-in-room.html. The report warned investors about the potential risk of investing in HSCO and OLIE. Many experienced traders and investors who read the Shell report learned of the potential dangers of an investment in OLIE and HSCO before the SEC’s trading suspension and avoided losses.
The Janice Shell report was not unusual. The SEC and the FINRA have stopped multiple issuers after information was published on the internet by third party researchers like www.pumpsanddumps.com. Perhaps this signals an intensified interest on the part of the SEC in promotions and promoters, or that it is using private reports like those published by Pumps and Dumps as a starting point for its investigations.
Brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspensions, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777.
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