When treading in the pink sheets, you will find some real doozies. Well, Gulf Alternative Energy (GAEC.PK) certainly fits that bill. I am currently short the shares. I shorted a few shares when they were @ $1.60 and within a couple of days, the stock was halted due to an SEC investigation into GAEC. The shares were suspended for a couple of weeks and reopened at $0.50 per share. I wish my short was of significant size.
From the SEC:
GAEC suspended by the SEC:
Jul 31, 2009
Pink OTC Markets News Service
Washington, D.C.— SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 60410 / July 31, 2009
SEC SUSPENDS TRADING IN THE SECURITIES OF GULF ALTERNATIVE ENERGY CORPORATION
The U.S. Securities and Exchange Commission today announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of Gulf Alternative Energy Corporation, at 9:30 a.m. EDT, July 31, 2009, through 11:59 p.m. EDT, on August 13, 2009.
The Commission temporarily suspended trading in these securities because of questions regarding the accuracy of statements made by Gulf Alternative Energy Corporation in press releases to investors and on its website concerning the quality of the company’s technology and the company’s business prospects and agreements.
The Commission cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not it has complied with the rule, it should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 5515760. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, it should refrain from entering quotations relating to the securities of Gulf Alternative Energy Corporation until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider prompt enforcement action.
There is little chatter about the company, but when you do find it, there are clearly some people who have followed the company for quite some time.
From Zekel at Hotstockmarket.com
The technology you reference has been alleged to be stolen from the inventors of the pre-processing technology. GAEC has no expertise in this field, no assets, a mountain of debt, and 30+ million shares (and counting) issued to management and friends at PAR Value – a virtual ATM machine!
Complaints have been issued to the SEC, including allegations that they (management at GFET/GAEC) stole over 6 million shares of partnering company, AETE.
William Carmichael, former CEO of GAEC, has audaciously taken GAEC’s equipment down the street to a new private venture called Proven Technologies, pretending to have clients (CNFO, Biotricity) and pretending to have proprietary equipment (which is the GAEC’s same equipment they are alleged to have stolen from AETE).
To say that this isn’t the first go round with the SEC might be putting it mildly:
Two Texas men, who perpetrated a massive e-mail spam campaign to drive up the demand for low value stocks they owned, will pay nearly $4 million in penalties and fines and will no longer be able to trade penny stocks under an agreement reached with the Securities and Exchange Commission.
The agreement, which was entered today in the form of two final judgments by Judge Kenneth Hoyt of the U.S District Court in Houston, prohibits Darrel T. Uselton and his uncle, Jack E. Uselton, from violating antifraud provisions of the federal securities laws and trading in penny stock. Darrel Uselton also agreed to pay $2,838,866.72 in disgorgement and prejudgment interest and another $1 million in civil penalties.
Another incredibly interesting point is the fact that I am placing a limit order to short shares @ $0.50 per share and the transaction is going off at higher price than my offer. This reeks of a market maker who is in on the game. A higher transaction price could be viewed as a positive for the stock. It appears as though the stock is up 10% today due to the transaction that I placed @ $0.50 hitting at $0.55. My hunch is that if I were to offer 100 shares for sale @ 0.12 that my trade might just go off at $0.55 or $0.60. I would try it but I don’t want to waste the trading fee.
Look at the history of the folks behind GAEC (GFET @ $0.03, no volume | AETE @ $0.13, no volume)
Here is another Gem from the March 31, 2009 quarterly report:
We do not have enough cash to satisfy our capital requirements for the next twelve months and we rely on shareholder loans and sales of common stock to pay our operating and research and development expenses.
B. Management’s Discussion and Analysis of Financial Condition and Results of Operation
We currently have few assets and no income. We are continuing to develop our cellulosic ethanol feedstock manufacturing facilities.