2001-03-29 sec-litreleases litigation_release 64 KB 2,607 chars

SEC v. Sean Edward St. Heart, No. LR-16947, District of Columbia (Mar. 29, 2001) — Press Release

raw: Sean Edward St. Heart

Sean Edward St. Heart, No. LR-16947 (D.D.C. Mar. 29, 2001)

Caption
SEC v. Sean Edward St. Heart
Source JSON
summary

Sean E. St. Heart, 25, committed securities fraud by posting a false message on Yahoo! Finance claiming a $20 million lawsuit against NCO Group, causing its stock to drop 28% and erase $200M in market cap, after which he consented to a permanent injunction without penalty due to inability to pay.

paragraph

The SEC charged Sean E. St. Heart with violating Section 10(b) of the Securities Exchange Act and Rule 10b-5 for posting a fabricated message on Yahoo! Finance claiming he had filed a $20 million lawsuit against NCO Group, Inc., which he had no basis to make. The fraudulent post triggered a 28% drop in NCO’s stock price over two trading days, eliminating over $200 million in market capitalization and increasing trading volume ninefold. St. Heart consented to a permanent injunction barring future securities law violations, and the court waived monetary penalties due to his demonstrated inability to pay.

narrative

On December 3, 1999, Sean E. St. Heart, age 25, posted a false message on the Yahoo! Finance message board claiming he, as President of St. Heart Productions, had filed a $20 million lawsuit against NCO Group, Inc., along with twelve other companies, alleging improper business practices. The message was entirely fabricated: St. Heart had not prepared any lawsuit, had no connection with other companies, and had no legal basis for the $20 million claim. The post followed a telephone call from NCO regarding an unpaid debt, and St. Heart posted it with knowledge or reckless disregard that it would manipulate NCO’s stock price. Over the next two trading days, NCO’s stock plummeted 28% from $49 9/16 to $34 5/16, erasing over $200 million in market capitalization, while trading volume surged to 2.9 million shares—a ninefold increase. The SEC filed a civil complaint on March 29, 2001, alleging violations of Section 10(b) and Rule 10b-5. Without admitting or denying the allegations, St. Heart consented to a permanent injunction prohibiting future securities fraud, and the court waived any monetary penalty due to his demonstrated financial inability to pay.

Enriched metadata

Scheme
cyber-fraud (100%)
Court
District of Columbia
Outcome
settled
Entity
Sean Edward St. Heart
Classified cyber-fraud(confidence 100%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →
Statutes
Section 10(b) of the Securities Exchange ActRule 10b-5
Parties
Securities and Exchange CommissionSean Edward St. Heart
Keywords
heartmessagenco's stockstock pricenco'ssean edwardedward heartsecurities exchangeimpact nco'sseanpricemillionsecuritiesstockexchange commission

Extracted insights

Dollar amounts 2
  • $200.00M $200 million $100M–$1B
  • $20.00M $20 million $10M–$100M
Entities 3
  • person accounts receivable management services
  • company nco group, inc.
  • agency Securities and Exchange Commission
Triples 14
  • SEC sued Sean Edward St. Heart for Internet fraud
  • Sean Edward St. Heart engaged in illegal cyber smear on Yahoo! Finance
  • Sean Edward St. Heart posted false message about NCO Group, Inc.
  • Sean Edward St. Heart's message caused market capitalization drop of $200 million
  • Sean Edward St. Heart posted fraudulent message on December 3, 1999
  • Sean Edward St. Heart claimed to be President and CEO of St. Heart Productions
  • Sean Edward St. Heart falsely claimed prepared $20 million lawsuit against NCO
  • NCO Group, Inc. is engaged in accounts receivable management services
  • NCO's stock price dropped $12 3/16 or 28 percent over two trading days
  • NCO's stock price fell from $49 9/16 to $34 5/16
  • NCO's trading volume surged to 2.9 million shares on December 7, 1999
  • Sean Edward St. Heart consented to permanent injunction against violating Section 10(b) of Securities Exchange Act of 1934
  • Sean Edward St. Heart waived monetary penalty based on demonstrated inability to pay
  • Civil Action No. 01-CV-00695 filed on March 29, 2001
View original SEC litigation releasesec.gov
Extracted body text (2,607c) 
SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 16947 / March 29, 2001 SECURITIES AND EXCHANGE COMMISSION v. SEAN EDWARD ST. HEART, Civil Action No. 01-CV-00695 (D.D.C.) (TPJ) (filed March 29, 2001) SEC SUES SEAN ST. HEART FOR INTERNET FRAUD On March 29, 2001, the Commission filed a complaint in the United States District Court for the District of Columbia alleging that Sean E. St. Heart, age 25, engaged in an illegal cyber smear by posting a false message about NCO Group, Inc. on the Yahoo! Finance Internet message board. St. Heart's message had a dramatic impact on NCO's stock price, causing its market capitalization to drop by over $200 million. The Commission's complaint specifically alleges that on Friday night, December 3, 1999, St. Heart posted a false message on Yahoo! in which he claimed that he, as the President and CEO of St. Heart Productions, together with twelve other companies, had prepared a $20 million lawsuit against NCO for its "business practices." The message was false in that St. Heart (1) had not prepared such a lawsuit, (2) had not joined with any other company in connection with such a lawsuit, and (3) had no basis to claim that he had been damaged in the amount of $20 million. The complaint alleges that on the same day, St. Heart received a telephone call about an unpaid debt from someone engaged by NCO, a public company engaged in accounts receivable management services. Several hours after he received that call, St. Heart posted his fraudulent message with the knowledge, or reckless disregard of the fact, that the message would materially impact NCO's stock price. The complaint alleges that St. Heart's message had a dramatic impact on NCO's stock price. Over the next two trading days, NCO's stock price dropped $12 3/16, or 28 percent, to $34 5/16 from its closing price of $49 9/16 on Friday, December 3, 1999, representing a loss of over $200 million of NCO's market capitalization. NCO's trading volume also surged to 2.9 million shares on December 7, 1999 - representing a ninefold increase relative to the average three-month daily volume. Simultaneously with the filing of the Commission's complaint, St. Heart, without admitting or denying the Commission's allegations, consented to the entry of a judgment permanently enjoining him from violating the antifraud provisions of the federal securities laws - Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. St. Heart further consented to the entry of a judgment that waives the imposition of a monetary penalty based on his demonstrated inability to pay.
OCR text (2,607c · plain-text · 99% conf) 
SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 16947 / March 29, 2001 SECURITIES AND EXCHANGE COMMISSION v. SEAN EDWARD ST. HEART, Civil Action No. 01-CV-00695 (D.D.C.) (TPJ) (filed March 29, 2001) SEC SUES SEAN ST. HEART FOR INTERNET FRAUD On March 29, 2001, the Commission filed a complaint in the United States District Court for the District of Columbia alleging that Sean E. St. Heart, age 25, engaged in an illegal cyber smear by posting a false message about NCO Group, Inc. on the Yahoo! Finance Internet message board. St. Heart's message had a dramatic impact on NCO's stock price, causing its market capitalization to drop by over $200 million. The Commission's complaint specifically alleges that on Friday night, December 3, 1999, St. Heart posted a false message on Yahoo! in which he claimed that he, as the President and CEO of St. Heart Productions, together with twelve other companies, had prepared a $20 million lawsuit against NCO for its "business practices." The message was false in that St. Heart (1) had not prepared such a lawsuit, (2) had not joined with any other company in connection with such a lawsuit, and (3) had no basis to claim that he had been damaged in the amount of $20 million. The complaint alleges that on the same day, St. Heart received a telephone call about an unpaid debt from someone engaged by NCO, a public company engaged in accounts receivable management services. Several hours after he received that call, St. Heart posted his fraudulent message with the knowledge, or reckless disregard of the fact, that the message would materially impact NCO's stock price. The complaint alleges that St. Heart's message had a dramatic impact on NCO's stock price. Over the next two trading days, NCO's stock price dropped $12 3/16, or 28 percent, to $34 5/16 from its closing price of $49 9/16 on Friday, December 3, 1999, representing a loss of over $200 million of NCO's market capitalization. NCO's trading volume also surged to 2.9 million shares on December 7, 1999 - representing a ninefold increase relative to the average three-month daily volume. Simultaneously with the filing of the Commission's complaint, St. Heart, without admitting or denying the Commission's allegations, consented to the entry of a judgment permanently enjoining him from violating the antifraud provisions of the federal securities laws - Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. St. Heart further consented to the entry of a judgment that waives the imposition of a monetary penalty based on his demonstrated inability to pay.