Update: Shallbetter Industries, Inc. - Can The Spam

Spam e-mails continue to tout Shallbetter Industries, Inc. (Pink Sheets: SBNS) at an alarming rate– and with disturbing consequences.  In recent days we have received dozens of these e-mails, each of which has urged us to invest in Shallbetter.  None of the e-mails provide any meaningful information about the Company.  And while some of the spam claims that the Company is "engaged in the acquisition, exploration and potential development of mineral properties in Outer Mongolia," there is no evidence that Shallbetter has any operations.  As we pointed out in a recent article, at least report, Shallbetter had no assets, no revenues, and no discernible business.  See, Shallbetter Industries, Inc. - Mad About Mongolia.

Since the promoters cannot rely upon the Company's achievements or sound financial condition to support their position, they have found a different way to create a sense of urgency and titillate investors.  The e-mails note recent increases in the price for Shallbetter common shares – and, indeed, the price and trading volume have soared in recent days.  On October 27, 2006, for example, Shallbetter common stock closed at a price of $0.65 a share, on volume of 25,976.  The next trading day, October 30^th, with promotional e-mails continuing to proliferate, volume increased to 363,069 and the share price increased to $0.98.

That was just the beginning.  On November 2^nd more than 2 million share of Shallbetter stock were traded.  Shares closed at $1.65.  The trend continued on November 3^rd.  By 2:30 pm on November 3^rd, over 3.3 million shares of Shallbetter common stock had changed hands, with shares reaching an intra-day high of $2.83.

Had Shallbetter releases news that caused share prices to rise approximately 450% in a week?  Had the Company's Mongolian venture borne fruit?  The Company has not released any information that would seem to justify the price surge.  An October 13, 2006 press release indicated that the Company was investigating properties in Mongolia, China and Korea and seeking financing for its operations.  The press release did not disclose the amount or terms of any potential financing, although it did disclose that the Company would be seeking money from a Singapore-based investment bank with ties top Shallbetter's President, Bruce Pridmore. 

In any event, the Company cautioned that "no firm acquisition commitments have been made by the company and no financing have (sic) been secured."

An October 20, 2006 press release was, similarly, unrevealing.  This time Shallbetter praised a pair of New York Stock Exchange-listed companies that had announced plans for a copper-gold project in Mongolia.  Shallbetter insisted that this project would "dramatically affect all properties in the region."

Finally, on November 3^rd, the Company announced that it had appointed Dr. David Strong, President of University Canada West to head up its Technical Advisory Team.  Dr. Strong has a background in earth science and geology.

Clearly, none of this news is likely to have played a significant role in the sudden ascent of Shallbetter shares.  What has?  The answer may lie in the identity of the person or persons behind the spam campaign.  Who is responsible for the constant barrage of e-mails?  Who has been selling millions of shares?

Perhaps regulators can find those answers and solve this puzzle.

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