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SEC connects Connect-A-Jet to "deceptive practices"
The Securities and Exchange Commission issued an order suspending the trading of shares of online charter broker Connect- A-Jet from October 1 to 12 because of alleged "deceptive practices." Trading resumed after Connect-A-Jet filed Form 15c2-11 to reinstate the quoting of its stock with the SEC, but the commission won't comment on whether the firm remains under investigation.
In its October 1 action, the SEC cited "a lack of current and accurate information" about the company and cautioned brokers, dealers, shareholders and purchasers to "carefully consider" any data the firm issued. The SEC also said it appeared Connect-A-Jet made "inaccurate assertions" regarding its affiliations and partnerships.
On its Web site, Connect-A-Jet claimed affiliation with Aviation Research Group/U.S. and FlightAware, a company that provides online flight-tracking. In a press release, also, Connect-A-Jet stated it had submitted a letter of intent "to enter into a charter partnership with Executive Jet Management, a NetJets and Berkshire Hathaway company."
However, those companies denied affiliation with Connect-A-Jet and demanded that it remove their names from its Web site and press releases.
"[Connect-A-Jet] and I have in no way attempted to defraud our shareholders or the general public," said company president Martin Cantu. He added that his firm had made a proposal to Executive Jet Management, but that "NetJets and Berkshire Hathaway were referenced as the ownership parties...and were not meant to be perceived as already doing business" with Connect-A-Jet.
Illegal Advertising Alleged
In its October 1 filing, the SEC also accused Connect-A-Jet of sending "spam e-mails and a blast fax touting the company's shares." The 2005 Junk Fax Prevention Act deems it unlawful to send unsolicited ads to fax machines without the recipients' permission, according to the FCC.
Cantu denied such activities, saying. "[Connect-A-Jet] in no way participated in, or was ever aware of, any fraudulent type 'spamming' that was taking place relating to its organization."
Connect-A-Jet entered the charter scene in August and its shares subsequently reached a high of $3. However, they were trading at about $0.45 in early November and were quoted on www.pinksheets.com with a "Grey Market" warning, the OTC Market's second-lowest tier, just above "Caveat Emptor." The company announced on October 22 that it had received more than 5,000 charter requests and had booked a Gulfstream IV on a domestic flight that provided "gross revenues exceeding $90,000."