The (Welcome) Death of a Stock Salesman
It's the end of an era... or at least of a notable decade. Earlier this month, penny-stock promoter Wall Street News Alert announced it is winding down after a decade-long run.
In a widely distributed press release that at times sounded like a eulogy to the dearly departed, WSNA confirmed that it "has left the investor relations business."
The obituary went on: After enjoying "a great run ... The company, once seen as one of the largest and most well-known small cap stock advertising firms, represented hundreds of clients before closing the doors and deciding to sell its assets." In so doing, WSNA will deprive investors of access to, in its own words, "one of the Internet's premiere financial destinations, offering the investment community some of the market's leading emerging opportunities ... introducing millions of potential investors to unknown companies."
Or so they'd have you believe.
Anyone shedding a tear? Anyone?
After tooting its own horn for several paragraphs, boasting of how it was "compensated up to $21,000 per day to email to its database of investors," how it amassed a library of "140,000 press releases indexed on the web," a Rolodex of "over a million recipients," and websites "purported to have received over 250 million hits," WSNA finally got to the point of its announcement:
WSNA "is now selling its websites and investor database. Interested parties should contact ..."
And that was really the whole point of the press release: a sales pitch. One last hurrah, one final grab for the cash, to help WSNA go out with a bang. But frankly, I'd call the whole event a scam.
Wait. Hold up a sec. "Scam"?
That's right. Scam. Because missing from a press release full of ad-speak and self-congratulation was this little tidbit of information: WSNA didn't quit. It got fired -- by the SEC.
Specifically, on Feb. 7, 2011, the Securities and Exchange Commission filed suit against WSNA in the U.S. District Court for the Southern District of Florida. The SEC's complaint, Securities and Exchange Commission v. Wall Street Capital Funding LLC [i.e., WSNA's parent company], Philip Cardwell, Roy Campbell, and Aaron Hume [its officers], included such colorful charges as:
- WSNA and its officers were "stock promoters [who made] their living repackaging 'news' released by penny-stock companies and distributing it along with their own, always optimistic commentary."
- In so doing, WSNA "knowingly or recklessly played a critical role in numerous penny-stock scams" distributed as "'spam' emails sent to as many as fifty million recipients at once ... Defendants' materials typically express a positive opinion about the company being promoted [but] Defendants have no reasonable basis for those opinions."
- In one example, typical of WSNA's dealings, it ran a pump-and-dump scam involving a "supposed oil-exploration-and-development company known as PrimeGen Energy ... According to its press releases, PrimeGen supposedly brought at least twelve oil wells into production in the span of nine months and generated many millions of dollars of revenues. PrimeGen, however, was a pure scam: its corporate headquarters were a rented mailbox in a UPS Store opened with a do-not-forward instruction; its phone line was unattended and never placed outgoing calls; and its web page was generated by copying the source code from another company's web site."
Result: On Oct. 13, 2011, WSNA agreed to a consent judgment with the SEC in which the defendants neither admitted nor denied the SEC's allegations. What WSNA did do was pay $300,000 in fines and disgorgement of profits, and promise to never, ever again have any "dealings involving penny stocks."
Cross their hearts, hope to die...
Of course, WSNA never said anything about not trying to sell off their websites, now that they're banned for life from running them themselves. Hence the sales pitch -- and hence the reason WSNA fails to mention why it's selling in the first place.
If you're interested in buying WSNA out of its troubles, we've got just a couple of humble suggestions for you: First, make your purchase offer insultingly low. And second, before moving into WSNA's tainted Internet real estate, make sure to rent a fumigator. It might get rid of the stench.
And one more: WSNA is asking interested buyers to contact them at firstname.lastname@example.org. So drop them a line. Tell them what you think about their site, their spam, and their 10-year record of touting many stocks that left mom-and-pop investors losing their retirement money -- and copy us in below.
Motley Fool contributor Rich Smith holds no position in any company mentioned, nor in any penny stocks in general.