On Friday, the 6th of April, Shane Whittle‘s latest promotion, Jammin Java (JAMN), previously discussed here, issued an 8K filing describing the sale of 6,250,000 shares of stock at $0.40 per share. This represents a massive 87% discount from the previous closing price of $3.11.
The shares were sold under Regulation S. For readers unfamiliar with the world of off-shore boiler rooms, “Reg S”, as it is known, is an exemption from the registration requirements which are designed to protect investors. As one might imagine, Reg S is prone to awful abuses. Here is what the SEC itself says about it:
The Off-Shore Scam Under a rule known as “Regulation S,” companies do not have to register stock they sell outside the United States to foreign or “off-shore” investors. In the typical off-shore scam, an unscrupulous microcap company sells unregistered Reg S stock at a deep discount to fraudsters posing as foreign investors. These fraudsters then sell the stock to U.S. investors at inflated prices, pocketing huge profits that they share with the microcap company insiders. The flood of unregistered stock into the U.S. eventually causes the price to plummet, leaving unsuspecting U.S. investors with enormous losses.
About a year ago, on the 11th of May, 2010, young Mr. Whittle’s previous promotion, Big Bear Resources (BGBR), announced their own, eerily similar, Reg S deal, selling shares at 70c, a slightly less egregious 30% discount to the prevailing market price. Since that placement, BGBR shares have fallen 93% to a recent 7c.
So Shane’s Jammin Java, a firm that has still not filed it’s 10K for 2010, a firm with zero cash on the balance sheet and total lifetime reported sales of $0.00, sells millions of shares at an almost Repros-like discount under a shady exemption from the registration requirements, echoing his prior promotion BGBR. Could offshore boiler rooms and price collapse be far behind?