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by Mike Caswell
The U.S. Securities and Exchange Commission has launched a civil fraud case against Geoffrey Eiten and National Financial Communications Corp., the distributor of OTC Special Situations Report. The regulator cites glowing reports by Mr. Eiten that misrepresented the prospects of four stocks, including Vancouver-based Nexaira Wireless Corp. The SEC says that Mr. Eiten, who holds himself out as "America's Leading Micro-Cap Stock Picker," made projections that had no basis in reality.
Among other things, he told potential investors that Nexaira had developed the "fastest router in the world" and was receiving revenue from Sprint and Comcast. In reality the company had no such deals and, at the time, its router had not received approval from the Federal Communications Commission, the SEC says. Mr. Eiten, who had bought Nexaira shares prior to issuing his report, either knowingly or recklessly misled investors, according to the SEC.
The SEC's complaint, filed in the District of Massachusetts on Monday, Dec. 12, identifies Mr. Eiten, 61, as a broker of 20 years who moved into investor relations in 1991. His business since the mid-1990s has been promoting penny stocks for paying clients through his company, National Financial Communications Corp. One of his promotional tools is the OTC Special Situations Report, a newsletter sent by mass mailings or through spam e-mails.
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