A lawsuit against IDO Security (OTC: IDOI) and several stock promoters sent the stock reeling today. A private investor in California filed a civil suit claiming that IDO Security, Empire Post Media, Mustang Alliances and others violated the state’s anti-spam codes. In his complaint, George Sharp alleges the company hired offshore promoters and advertisers to distribute unsolicited emails imploring him to buy the stock. Potential damages could reach $1,000 for each spam email per recipient. The claimant is also seeking an immediate injunction to halt the emails. Traders over the coming days must decide whether the lawsuit has any merit.
The news did not sit well with traders as they sold shares in heavy activity. During the second hour of trading when the news surfaced, the stock plummeted from its intraday high of $0.74 to nearly $0.45. Share prices continued to tumble throughout the session reaching a low of $0.29. Shares of IDO Security ended the day down 37 cents at $0.35, or a loss of 51% from the previous day’s close. A little over 7.5 million shares exchanged hands on the day, which dwarfs the average daily volume of 440,000.
Just last Thursday, the stock was propelled from $0.30 on news that IDO Security had installed additional MagShoe security devices in government offices throughout Israel. Also in the news was the bus bombing of Israeli tourists in Bulgaria. Since shares commenced trading at the beginning of the year, the stock has traded mainly in a range between $0.25 and $0.50. The high for today is the pinnacle for the stock so far this year, while the low print occurred on the first day of trading at $0.10.
Six stock promoters, including some mentioned in the lawsuit, sent out letters and emails today concerning IDO Security. None of the promoters are listed as receiving any compensation. Stock Castle had this note:
Later in the week, IDOI announced that the Company is demonstrating the MagShoe at an Illinois prison facility as a pilot program for Illinois officials to confirm the effectiveness of the MagShoe to combat the penetration of cellular phones, electronic devices and weapons into the prison.
A total of 125 stock promotions can be viewed on Stockpromoters.com.
IDO Security designs, develops, and markets devices used in security screening for the detection of metallic objects contained within footwear. The company’s MagShoe device can be used in airports, schools, stadiums and prisons. MagShoe has been deployed in several countries that include Israel, Czech Republic, China and Germany. The company faces direct and indirect competition from ten other companies.
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