Fantastic financial forecasts

The exotically-named PinkMonkey.com, Inc and its founder and controlling shareholder, Patrick Greene allegedly put out a press release which led to a 950 per cent rise in the company’s share price. It claimed that its new website would “quickly reach a significant market share in the US$400 million” study aids market. The SEC complaint says that the site was neither new nor did it have any real prospect of creating a strong market presence. At the time of the release, the website had been live for 14 months and gross revenue in that time had amounted to a grand total of US$30. The company’s own projections indicated that it would take a year to achieve even a five per cent market share. Prior to the release the share traded at US$1.50 or below but the price leapt to a peak of US$17 two days later and at its height the market capitalisation of PinkMonkey was more than US$200 million. The price subsequently closed at US$7.25 on the day that the company and Greene issued a revised press release, it subsequently fell to less than US$1 a share. The defendants have agreed to permanent anti-fraud injunctions without admitting or denying the SEC allegations and Greene will pay a US$20,000 civil penalty. (SEC v PinkMonkey.com, Inc and Patrick R Greene.)