internet firm Internet Solutions for Business (IS4B; Nasdaq ISFB)
has been accused by American fraud investigators of making false
claims about billions of dollars of business to inflate its
Securities and Exchange Commission (SEC) alleges that the
company and its founder and chief executive officer Lawrence
Shaw hyped its products and business relationships without any
once dubbed Coventry's first internet millionaire, could face a
stiff financial penalty if the case is proven.
which is based at Coventry Canal Basin, floated on the
technology-driven NASDAQ amid a great fanfare in 1999. But its
share price has dropped from a high of over $7 to as low as a
few cents and numerous staff have left the company.
a charge filed in the US District Court, Southern District of
Nevada (Las Vegas Division), the SEC says that Shaw held IS4B
out to be a sophisticated high-tech internet company through
press releases, reports and boasts on its website.
the SEC says many of the claims were "either outright lies
or gross exaggerations" made at a time that the company was
in a "precarious financial position."
a statement issued today as part of clampdown on internet
companies, SEC said:
SEC alleges that ISFB's supposed cutting-edge products never
reached the point of commercial viability.
example, a "$4.1 billion website audit service,"
repeatedly hyped by the company, was nothing more than a
concept which was never developed.
announcements of business relationships with "blue
chip" companies were either outright lies or gross
ISFB's stock price projections, 300 per cent increase over the
mid-term, were without any reasonable basis and were made at a
time during which the company was in a precarious financial
dire financial problems, ISFB's stock price and trading volume
substantially increased contemporaneously with the company's
fraudulent promotional activities.
SEC seeks permanent injunctions against future violations of
the antifraud provisions of the federal securities laws,
against ISFB and Shaw."
Director of Enforcement Richard H Walker said:
cases are a sobering reminder for investors that, on the
Internet, there is no clearly defined border between reliable
and unreliable information.
investors must exercise extreme caution when they receive
investment pitches online.
actions involve a virtual checklist of common securities fraud
lured investors with promises of fast and easy profits in
thinly-traded, or even privately-held, development stage
companies that operate in 'hot button' industries."
spokesman for IS4B in Coventry said Lawrence Shaw was
"overseas" and would be out of the country until
no comment because we don't know anything about it."