The U.S. Securities and Exchange Commission said Tuesday it suspended trading in the stocks of three Southern Nevada companies as part of a national crackdown on securities fraud involving penny stocks.
The SEC said the suspensions were ordered in an effort to "combat microcap stock fraud." Locally, suspension orders were filed against:
• Uniontown Energy Inc., based in Henderson and Vancouver, Canada.
• Kore Nutrition Inc. of Henderson.
• Prime Star Group Inc. of Las Vegas.
The nationwide crackdown involved 18 public small or "microcap’’ companies and came after SEC investigators raised questions about the adequacy and accuracy of publicly-available information about them.
“They may be called ‘penny stocks,’ but victims of microcap fraud can suffer devastating losses,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement Tuesday.
“The investing public does not have accurate or adequate information about these securities to use in making informed investment decisions. Nonetheless, stock-touting websites, Twitter users, and often anonymous individuals posting to Internet message boards have hyped many of these companies, and these promotional campaigns have been followed by spikes in share price and trading volume,’’ George Canellos, director of the SEC’s New York Regional Office, said in the statement.
For instance, the SEC said, shares in Kore Nutrition began to spike on Aug. 31 following the release of a company-paid research report setting a target price of $10.50. Then, on Sept. 1 and 8, the company issued press releases announcing new distribution agreements to market its energy drinks. The research report and distribution agreement claims were reiterated on numerous stock-promotion websites, touting Kore Nutrition as a “winner.”
But Kore Nutrition’s quarterly report for the period ending Sept. 30, filed with the SEC on Nov. 15, made no mention of the announced distribution agreements, the SEC said.
Kore Nutrition lists an address on St. Rose Parkway and says it’s headed by Jeffrey Todd, principal executive officer.
The company says it sells bottled water and energy drinks in association with professional poker and sports endurance events.
It’s working to secure endorsements of poker players, to sponsor poker tournaments and to host its own branded poker tournament, but has accumulated losses of $13.4 million. Its first quarter revenue was only $888.
At the phone number listed for Kore Nutrition, the receptionist answers as "Go All In.’’
A request for comment was left with an official there on Tuesday.
The company's stock last traded at 12 cents, down from its 52-week high of 84 cents.
Prime Star Group, which lists an address on Decatur Boulevard in Las Vegas, says it’s been headed by CEO Roger H. Mohlman and President Edward Braniff and that it sells food and beverage products – but that it had no revenue in the first three quarters of 2010. It hasn’t filed financial reports for the fourth or first quarters.
Braniff said Tuesday that the company will be looking into the SECs complaint.
He said that since starting as president on March 1, he's asked for new accounting and auditing and is working to get the company caught up on its SEC filings.
"My objective is to be sure we're fully compliant," Braniff said.
Uniontown Energy, which reported having $789 in assets as of Jan. 31 and no sales in the three months ended Jan. 31, said in a March 17 report it was headed by CEO Terry Fields. On Monday it announced a deal for the acquisition and exploration of oil and gas claims in Montana.
Its Henderson address is on Whitney Mesa Drive.
Now headed by CEO Darren Stevenson, the company said it was surprised by the SEC suspending trading in its shares and it "believes that all of its public disclosures have been accurate to date and that they satisfy all of the company’s obligations under applicable securities and corporate laws.’’