Tweeting in the Night: Judgment Entered Against ARCS Stock Tout
Arcis Resources Corporation ("ARCS") is a Nevada corporation that had had an address in Denver, Colorado. ARCS stopped filing periodic reports with the U.S. Securities and Exchange Commission ("SEC") by January 2015, and on Jan. 13, 2015, it filed a form with the SEC to terminate its registration with the Commission. It subsequently allowed its domain name to lapse. Nonetheless, ARCS was quoted and traded on the OTS Markets Group "Pink Quote" Link. Yet, ARCS did not provide information about itself on the OTS Markets website after 2016.
For more information about the OTS Markets Group trading platforms and the requisite disclosure requirements, see my Oct. 29 Blog "Keeping Securities Disclosure in the Pink: Amendments to SEC Rule 15c2-11." At some time in 2020, the ARCS domain name was purchased by Andrew L. Fassari.
Tweeting in the Night
In any event, ARCS was a defunct company in December 2020 and remains defunct today. However, on Dec. 9, 2020, Fassari, using the Twitter handle "@OCMillionaire," began buying ARCS stock, and by Dec. 18, he had acquired and then sold over 41 million shares of ARCS stock, netting almost $500,000. Fassari began a very active "marketing" campaign of 120 tweets, falsely claiming that ARCS was "reviving its operations and expanding its business." He misstated his own "success" in buying ARCS stock and also falsely claimed that "huge" investors and a hedge fund were buying in. The effort came to a close when the last CEO of ARCS became aware that (as cited in the SEC Complaint) "someone not affiliated with Arcis Resources Corporation is spreading lies about Arcis Resources on Twitter message boards." He notified the OTS Markets Group, but it is not clear that any action was taken. Finally, on Feb. 23, 2021, the CEO e-mailed the staff of the SEC complaining about Fassari's activities.
ARCS Stock Tout
The subsequent SEC investigation led to the filing of a Complaint on Mar. 2, 2021, by the Commission against Fassari in the U.S. District Court for the Central District of California. On Aug. 27, Fassari consented to entry of judgment against him. Two things are noteworthy about this case. The first is the continuing use of social media to feed stock market "frenzies." See my Feb. 2, 2021 Blog "Rupture Rapture: Should the GameStop?" for its discussion of the "Reddit Mob" and the cult-like behavior that ensues.
The second noteworthy aspect is how quickly the SEC moved to bring charges against Fassari. Contrast that with the still-unaddressed responsibility of Keith Gill, a 34-year-old "influencer" and registered broker/dealer who, according to the financial press, "posted dozens of videos or live streams over" a six-month period during which GameStop stock went from the single digits to over $400 a share. See my Feb. 9, 2021 Blog "Inciting to Rupture: Keith Gill and the GameStop Surge."
If you have any questions about this post or any other related securities or general business law matters, please feel free to contact me at pdhutcheon@norris-law.com.
