People who bought shares of East Delta Resources Corp. in 2004 and 2005 were happy. As the price of one share of East Delta rose from 25 cents per share to more than one dollar per share, they may have wondered just how many times their money would double. The trading volume data showed that lots of people were buying the stock of the mining company. And why not? Press releases from East Delta showed that the company was doing well and that the stock was a “can’t miss” opportunity to make profits of several hundred percent.
The U.S. Securities and Exchange Commission has charged East Delta, Victor Sun, David Amsel, and Mayer Amsel with creating a convincing lie. The SEC alleges that the positive press releases were false and that the defendants manufactured the high volume of trades by trading the stock back and forth between accounts that they controlled. According to the SEC’s complaint, all of those actions had the desired effect and allowed the defendants to reap approximately $1.4 million by selling shares they controlled to the unsuspecting investors who clamored for more East Delta stock.
Market manipulations such as the one alleged in this case are especially dangerous. Investors believe that they are basing their investment decision on hard data (the trading volume, and the rise in the share price), only to learn that it is possible to manufacture that data out of the imagination of a scam artist. Only those investors who hire an experienced investor protection company to investigate can have any comfort that they are basing their decision on facts rather than fiction. Thousands of senior citizens are now starting over with nothing because they believed they could do an adequate investigation on their own. If you need your nest egg, do what banks do when their money is in the open: hire private protection.
