SEC v. Contrarian Press, et al.

Violations Charged

Section 17(b), Section 10(b), Rule 10b-5

Case Overview

Scott Fraser was both the CEO of Empowered Products (EMPO) and the owner of Contrarian Press, a stock-picking newsletter publisher. Starting in 2011, he ran promotional campaigns recommending EMPO stock without telling readers that he wrote them, that his own company published them, or that EMPO was paying Contrarian Press thousands of dollars a month under an investor relations agreement. Some articles ran under the alias 'Charlie Buck,' referred to Fraser in the third person, and expressly denied the payments that existed.

Later campaigns added another layer: Fraser hired third parties, including Nathan Yeung, who worked under his own alias through a front company, to arrange promotions and push the connection further out of sight. During each campaign EMPO's price or volume rose substantially. The SEC charged all three defendants with fraud and with promoting a stock for undisclosed compensation.

What Joe Did

Joe was the principal investigator, and when the defendants moved to transfer the case out of New York, he filed the declaration opposing the motion. In it, he described personally retrieving Bluesheet data covering more than 10,000 trades across 28 data fields, building the pivot-table analysis that identified over 4,000 EMPO investors with Southern District of New York addresses, and tracing the promotion's payment chain from Yaksha Industries through Hong Kong to the promoters, including $326,700 routed through a New York correspondent account. The court denied the venue motion in a published opinion.

Outcome

The case stayed in New York, and the defendants proceeded to resolution in that forum.

Records Analyzed

• Bluesheet data (10,000+ trades)
• Promotional newsletters & invoices
• Bank records
• CRM customer data
• CLEAR reports