Analyst bias

Internet Solutions for Business, Inc (ISFB), a publicly traded company based in England and its founder and CEO Lawrence Shaw, are alleged by the SEC to have engaged in fraudulent promotion. ISFB claimed to offer a range of advanced products and have lucrative business relationships with “blue chip” companies. The company promoted these features on its website, through press releases and in reports that it paid to have published. All the material was passed by Shaw. The SEC claims that the purported leading-edge products were never viable. It points to references to a “US$4.1 billion website audit service” that was pushed by the company but which never left the drawing-board. It also describes the statements about business relationships with established respected companies as “either outright lies or gross exaggerations.” The SEC also alleges that ISFB’s stock price forecasts (330 per cent rise in the mid-term) had no reasonable basis and were made when the firm’s finances were uncertain. Despite the difficulties, the stock price and trading volume grew significantly at the time of the fraudulent promotions. The SEC seeks permanent injunctions against future breaches of the anti-fraud provisions in the federal securities laws, against ISFB and Shaw and a civil fine against Shaw.