Saturday, August 11, 2007
Jerome Armstrong Fined $30,000 By SEC
DAILY KOS CO-AUTHOR FINED $30K FOR UNETHICAL STOCK TOUT
Wed Aug 08 2007 19:12:23 ET
Prominent liberal blogger Jerome Armstrong has agreed to pay nearly $30,000 in fines in a settlement with the Securities and Exchange Commission over allegations that Armstrong touted the stock of a software company, without disclosing that he was being paid to do so, the NY TIMES reports.
Armstrong is the co-author of "Crashing the Gate: Netroots, Grassroots, and the Rise of People-Powered Politics", with Markos Moulitsas of Daily Kos. He is also the founder of the Democratic activist site MyDD.com.
Under the agreement, Armstrong neither denies nor admits to the allegations.
"It's good to see the matter finally end," Armstrong said in an e-mail message to the TIMES.
Litigation Release No. 20228 / August 7, 2007
SEC v. Sierra Brokerage Services, Inc., et al., United States District Court for the Southern District of Ohio. Civil Action No. C2-03-326
On July 26, 2007, the Honorable John D. Holschuh, U. S. District Judge for the Southern District of Ohio, entered a Final Judgment as to defendant Jerome B. Armstrong ("Armstrong"). The Final Judgment permanently enjoins Armstrong from future violations of Section 17(b) of the Securities of 1933. The Final Judgment further orders Armstrong to pay disgorgement in the amount of $5,832, prejudgment interest of $3,235, and a civil penalty of $20,000. Armstrong consented to the entry of the Final Judgment without admitting or denying the allegations of the Commission's Complaint, except as to jurisdiction.
The Commission's Complaint, filed on April 14, 2003, alleged that beginning on March 6, 2000, Armstrong touted the stock of BluePoint Linux Software Corporation ("BluePoint") by posting unsubstantiated, favorable buy recommendations on the Raging Bull internet site. Armstrong posted over eighty such recommendations during the first three weeks that the stock of BluePoint was publicly traded. According to the Complaint, Armstrong praised BluePoint's investment value and encouraged investors who were experiencing trouble having their orders filled to keep trying. The Complaint further alleged that the promoters of BluePoint were secretly transferring stock in three other companies to Armstrong at prices below the then current market for those three stocks and that Armstrong made at least $20,000 by selling the shares he received from the promoters of BluePoint. The Complaint alleges that Armstrong did not disclose in his internet postings that he was being compensated for making the postings.
In a wide-ranging telephone interview, Mr. Armstrong was very candid about his day-trading days, calling himself an “uneducated investor’’ and a “small fish’’ who got caught up in a much bigger trading scam about BluePoint, a penny stock.
He wasn’t particularly young at the time — in his mid-30’s and a graduate student. He sounded as though he had been swept up in the exuberance of day-trading in its heyday several years ago, and wasn’t paying particular attention to the downside of penny stocks or to regulations regarding trading. (We’re not offering any judgments on his actions here, just reporting his observations.) - [Oh, no - Gawd no - the Liberal New York Times would never try to offer any judgments or opinions one way or the other now, would they? - Drake]
The S.E.C. alleged that he touted the stock by posting “unsubstantiated, favorable buy recommendations on the Raging Bull internet site. Armstrong posted over eighty such recommendations during the first three weeks that the stock of BluePoint was publicly traded.”
In the interview, he said: “Well, I didn’t obviously know any of the S.E.C. rules — even about disclosure,’’ he said. “I happened to get caught up in a deal that got caught up with the S.E.C., and I got caught up with them.”
And he added, “I can’t say I’m not guilty or anything. I didn’t admit guilt either. All I can do is point to that one final judgment."
Even The New Republic has questions about what Armstrong engaged in:
Are Jerome Armstrong and Markos Moulitsas (of the famous Daily Kos) engaged in a pay-for-play scheme in which politicians who hire Armstrong as a consultant get the support of Kos? That's the question that's been bouncing around the blogosphere ever since The New York Times's Chris Suellentrop broke the news last Friday about a 2000 run-in Armstrong had with the Securities and Exchange Commission over alleged stock touting. But Armstrong, Kos, and other big-time liberal bloggers have almost entirely ignored the issue, which is a bit surprising considering their tendency to rapidly respond to even the smallest criticism.
Why the strange silence in the face of such damning allegations? Well, I think we now know the answer. It's a deliberate strategy orchestrated by Kos.
So far, Kos's friends in the fiercely independent liberal blogosphere seem to have displayed a sheep-like obedience to his dictat.
P.S. Was Armstrong really, as Kos claims, a "poor grad student" when he settled with the SEC? Armstrong agreed to the settlement in December 2003. That was eleven months after he and Kos started their political consulting business and six months after the two were hired by the Dean campaign at a rate of $3,000 a month.
Jerome Armstrong And His Pennies
And the KoSucks site swings back at Matt Drudge, calling him a "Famous self-hating closeted homosexual and right wing propagandist blogger."
Awwwwwww, poor little Markos Zuniga. You know what they say, those that hurl charges are themselves guilty of what they allege about others! Psychology 101 calls this Projection.
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