Glendale Publisher Dresser Hit With SEC Complaint

A Glendale publisher of an investment newsletter was accused by the Securities and Exchange Commission Thursday of violating federal laws for allegedly not fully telling his readers that he was paid by the firms whose stocks he touted.

The SEC’s complaint against Robert A. Dresser and his company, Financial Observer/West, accompanied a consent decree in which the defendants, without admitting or denying guilt, agreed not to violate securities laws.

Dresser’s company published a newsletter called the Stockbroker Special Situations Newsletter that portrayed itself as a publication that “independently reported” on publicly held companies and evaluated their securities, the SEC said.

But the SEC alleged that, in fact, eight publicly traded companies that were subjects of articles in the newsletter since October, 1986, paid fees to Dresser or his company “in exchange for a favorable article” that recommended purchasing the companies’ stock. The SEC did not identify the eight companies.

Nationwide Circulation

Seven of the eight companies “paid a cash fee ranging between $14,000 and $17,000,” the SEC alleged. The other company apparently was Canadian, as the SEC alleged that it paid a fee using common stock that trades on the Vancouver Stock Exchange and was valued at 22,100 Canadian dollars, or about $18,100 U.S.

The SEC’s complaint indicated that each of the other seven companies allegedly paid thousands of dollars to Dresser, 59, payments that totaled more than $100,000. Neither SEC officials nor Dresser could be reached.

The SEC said Dresser’s Stockbroker Special Situations Newsletter was mailed free to about 20,000 people nationwide and was also distributed as inserts in other financial publications whose names were not disclosed.

The newsletter “purported to analyze the operations, management and potential growth of a small publicly traded company,” but the articles “contain almost exclusively favorable comments on the growth prospects of the featured companies,” the SEC said.

In six of the eight issues in which the defendants allegedly got fees, the fees and their amount “were not disclosed in the newsletter or elsewhere,” the SEC said. In the other two issues, the newsletter mentioned getting fees but did not disclose their amount, the agency alleged.

Dresser and Financial Observer/West would solicit companies to be the subject of articles in the newsletter, in part by saying that the newsletter was ready to recommend that the stock be purchased, according to the complaint. Solicited companies also would be told that stocks of companies previously mentioned in the newsletter had gone up in price after publication, the complaint alleged.