SEC Suspends trading in shares of pump & dump Southern USA Resources (SUSA)

Today the SEC suspended trading in Southern USA Resources (SUSA). This hard mailer pump has been going for just over a month, with the volume starting around January 15th. It is rare for the SEC to suspend trading in a stock while the promotion is still ongoing.

Tim Lento posted a scan of the hard mailer. The compensation was listed as $900,000.

PromotionStockSecrets.com has a nice little report on SUSA. Sharesleuth also reported on it.

Notice of Suspension (pdf)
Suspension order (pdf)

The Commission temporarily suspended trading in the securities of Southern USA Resources
because of questions that have been raised about the accuracy of assertions by Southern USA
Resources, and by others, in press releases and other public statements to investors, and in
promotional mailers, concerning, among other things: (i) the company’s operations; and (ii) the
company’s outstanding shares.

I have been looking for SUSA shares to short for weeks for a long-term short but was not able to find any. SUSA will resume trading in two weeks on the grey sheets. I expect SUSA to gap down over 50% when it reopens for trading.

Part of the SUSA pump involves a research report by Chris Jarvis, CFA, CMT (President & CEO of Caprock Risk Management LLC); Caprock was paid $15,000 by SUSA for the report. Should I find the time, I do hope to eventually put together detailed reports attacking Jarvis and other ‘rent-an-analysts’ that put out fluffy research reports about pump and dump companies. After that, hopefully their crappy research would be less useful to pumpers. A similar outfit is Murphy Analytics.

Looking at Jarvis’ one year price target of $4.00 for SUSA and his heady revenue (almost $25m for FY2013!) and profit predictions are all I need to see to prove that the report is so biased as to be worthless. Since April 27, 2012 SUSA has owned the property in Alabama that it wants to mine, and yet it has zero revenues since then and its current liabilities as of its most recent 10Q are greater than all of its assets. That is hardly the recipe for doing any mining whatsoever, let alone generating tens of millions of dollars in revenue this year.

Disclaimer: I have no position in any stock mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.