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Funny article in which the reporter actually thinks he’s “busting” these stock promoters…silly David, stock promoters are weeds, you kill one, 2 more pop up…all you can do is to learn from their easy-to-read-actions, not rip on them….TAKE TWO OF THESE AND CALL ME IN A MONTH, they help

But little David did put a lot of effort into this obvious article, so below is his masterless/basic/zzzz work:

David Baines, Vancouver Sun
Published: Wednesday, July 15, 2009

The nearly 1,200 people in B.C. who have earned chartered financial analyst designations should be alarmed with the conduct of some of their fellow CFAs, particularly those who prepare “research reports” recommending essentially worthless penny stocks for cash and stock payments.

Beacon Equity Research, a Texas-based stock promotion firm, employs a stable of CFAs to write research reports for junior companies that trade on the dreadful OTC Bulletin Board and Pink Sheets in the United States. These reports routinely make “speculative buy” recommendations for companies that have no real hope of turning into real businesses.

In many cases, these reports are served up in conjunction with aggressive spam campaigns designed to incite unsophisticated investors into investing in these nags, many of which have close connections to Vancouver.

Beacon’s research reports and attendant spam campaigns are financed by private third-party firms whose beneficial owners are never revealed, but are almost certainly closely connected to the companies’ insiders. In some cases, these third parties pay up to $1 million for what are euphemistically called “investor awareness” programs.

In my view, these reports — especially when they are delivered in conjunction with spam campaigns — do not square with the CFA Institute’s code of ethics, which requires its members to:

- “Act with integrity, competence, diligence, respect and in an ethical manner with the public.”

- “Use reasonable care and exercise independent professional and ethical judgment when conducting investment analysis [and] making investment recommendations.”

- “Promote the integrity of and uphold the rules governing capital markets.”

If I were a CFA, I would be concerned. Getting a CFA designation is not easy. You need a bachelor’s degree or equivalent as well as four years of relevant work experience, and you need to pass three six-hour exams that have extremely high failure rates.

If I were a CFA, I wouldn’t want anybody debasing this designation by issuing “research reports” that are bound to cause financial harm to anybody who takes them at face value. But that’s exactly what Lisa Springer and Victor Sula, both CFAs, have been doing with alarming regularity at Beacon Equity Research.

In September, Sula prepared a research report recommending GreenChek Technology Inc. as a “speculative buy” with a target price of $3.42.

GreenChek is a former Vancouver exploration company that acquired rights to a device that purportedly helps internal combustion engines burn fuel more cleanly and efficiently.

Sula predicted the company “could turn cash flow positive in 2009 and record net profits of $6.9 million [and] net year on revenues of $48.6 million.” This was a rather bold statement, considering the company had no revenues and only $58 in total assets.

Sula also referred to GreenChek’s “experienced” management, including CFO Antoinette Boquiren, who he described as a University of Alberta graduate, a certified fraud examiner and a business valuator accredited in litigation. Problem is, the bodies that dispense these credentials say they have never heard of her.

The disclaimer to Sula’s reports reveals that a shareholder named Pine Mountain Ventures paid BlueWave Advisors (Beacon’s parent company) $100,000 “to manage a comprehensive investor awareness program including the creation and distribution of this report.” Pine Mountain’s beneficial owner is not revealed.

The disclaimer acknowledges this payment creates a conflict of interest, and the report should therefore be regarded as nothing more than a “commercial advertisement.” Problem is, it looks and reads like a genuine research report. And it has the added weight of Sula’s CFA designation behind it.
In April, Beacon sent a flurry of spam e-mails happily regurgitating GreenChek’s claim that it would be manufacturing its energy-saving devices within eight weeks and generating $50 million US revenue per year.

How the company intends to finance this growth is a bit of a mystery. By Feb. 29 (the date of its last financial filing), its total assets were just over $8,000 and its stock was trading at a mere eight cents.
More recently, Sula issued a research report recommending Green Star Alternative Energy Inc. with a price target of $5.70.

Green Star, run by West Vancouver promoter Miodrag (Mike) Andric, claims to be negotiating with major firms to develop wind farms in Serbia, but Dow Jones Newswire columnist Carol Remond recently reported that those discussions amounted to little, if anything.

Meanwhile, the B.C. Securities Commission issued a cease-trade order against the company for reporting deficiencies, and Pink Sheets issued a skull and crossbones warning to investors because of Beacon’s spam campaign. The stock is now trading at 61 cents, a tad shy of Sula’s $5.70 target price.
The perilous nature of these research reports was hammered home Monday when the U.S. Securities and Exchange Commission filed a complaint in a Seattle court alleging that Vancouver promoter Pak Peter Cheung and several others orchestrated a fraudulent “pump-and-dump” scheme in which they secretly unloaded more than $1 million worth of shares of MitoPharm Corp.

Also named as defendants are Seattle lawyer David Otto and Texas public relations specialist Charles Bingham and his firm, Wall Street PR.

The SEC alleges that between April and September 2007, the defendants embarked on an aggressive public relations scheme to tout anti-aging beverages and nutritional supplements that didn’t actually exist. The stock, which traded on the Pink Sheets, rose to $2.30, then plunged to a nickel.

Not mentioned in the complaint was that Springer, our trusty CFA, issued a favourable research report on MitoPharm in August 2007, when the alleged fraud was in full flight.

She gamely projected gross revenues of $9.6 million in 2007, $41 million in 2008, and $90 million in 2009. On this basis, she recommended the stock as a “speculative buy” with a target price of $3.58.
The disclaimer noted that Wall Street PR, who the SEC has named as one of the alleged perpetrators, paid Beacon $9,000 for the report. Investors who took comfort in Springer’s CFA designation should feel horribly violated. And CFAs who are trying to maintain high ethical standards should feel terribly betrayed.

Tags: Basics