Jammin Java Corp. (OTC:BB: JAMN, Stock Forum), a heavily promoted coffee company that was recently cease traded by the British Columbia Securities Commission, is being investigated by regulators in the United States, Stockhouse has learned.
As noted in a May 26 Stockhouse Short Report, Jammin Java has been a disaster for investors who bought in when the stock was trading around the $6 level.
Having taken a nosedive to 66 cents, the company currently has a market cap of $50.1 million, based on 76.7 million shares outstanding. The 52-week range for the stock is $6.35 and 17 cents.
A quick rebound seems unlikely now that the U.S. Securities and Exchange Commission is investigating Jammin Java and its officers and directors in connection with an alleged “pump-and-dump” scheme.
(“Pump and dump” schemes generally involved the touting of a company’s stock through false and misleading statements to the marketplace. After pumping the stock, the perpetrators make huge profits by selling their cheap stock into the market.)
According to documents filed in a U.S. District Court in Oakland Calif., SEC staff is looking into allegations that thousands of investors were defrauded out of millions of dollars when they purchased shares of Jammin Java at artificially inflated prices, allegedly based on online newsletters that were widely disseminated through blast emails, websites and investor message boards, court documents show.
The stock price rose from 17 cents in December 2010 to $6.35 on May 12, 2011 and then plummeted to under a $1 even though Jammin Java’s public filings portray the firm as a shell company that had generated no revenues and had an accumulated deficit of $511,760.
Jammin’s chairman Rohan Marley is the son of the late reggae star Bob Marley. The company’s address is Beverly Hills, California.
SEC staff are now seeking information about who is responsible for newsletters that allegedly touted Jammin Java’s stock, and have obtained information indicating that the email address marketingacesinc@gmail.com potentially belongs to an alleged touter in the “pump and dump” scheme.
Lawsuits filed by “John Doe” plaintiffs who own free e-mail accounts from Google Inc. (NASDAQ: GOOG, Stock Forum) seek to block subpoenas to the search engine company sent to uncover their identities, Bloomberg News Service has reported.
John Doe’s is attempting to quash the subpoenas on the basis that the SEC hasn’t offered any evidence to support its claims, or shown why John Doe’s real identity is necessary to the investigation, court documents show.
On September 9, Jammin Java issued a statement saying that neither Jammin, nor anyone affiliated with the company has participated in any “pump and dump” or other unlawful scheme designed to unlawfully inflate the company’s stock.
“Jammin expressly repudiates any such fraudulent conduct and strongly condemns any unlawful activity,’’ the company said in a press release.
Jammin also said it is co-operating with the SEC investigation.
News of the SEC probe comes after the BCSC issued a cease trading order on May 20th, 2011, noting that the company had failed to file numerous documents, including financial statements from as far back as October 31, 2008, as well as news releases and material change reports that should have contained details of changes to the company’s corporate structure.
At the time, BCSC spokesman Richard Gilhooley said the cease trading order was issued in B.C. under rule 51-509 which requires U.S. over-the-counter market issuers with substantial connections to B.C. to make certain required disclosures. (Click on the link for details).
The cease trade order in B.C. remains in effect, but does not apply in other Canadian provinces.