The Daily Swarm - Qtrax a stock fraud scheme? 'There will predictably be some litigation...There's a good chance the SEC may take action too'

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January 29, 2008

Qtrax a stock fraud scheme? 'There will predictably be some litigation...There's a good chance the SEC may take action too'

L.A. Times | Read Full Story >

Brilliant Technologies shares set a 52-week high of 9.2 cents Friday in heavy over-the-counter trading before any official announcement. But trading volume tripled Monday and the share price plunged to 5 cents, cutting the stock’s market value to about $35 million.

That market value drop of more than $25 million should be enough to trigger a shareholder class-action lawsuit alleging fraud, Columbia University securities law expert John Coffee said.

“There will predictably be some litigation,” Coffee said. “There’s a good chance the SEC may take action too.”

A spokesman for the Securities and Exchange Commission said the agency couldn’t comment on specific companies. He noted that such “pink sheet” stocks as Brilliant Technologies’ face much less scrutiny than companies trading on major exchanges.

Qtrax spokesman Justin Kazmark declined to comment on the applicability of securities laws forbidding false material statements.