Ill. comptroller employee disciplined for using state computer in attacks on companies’ stocks

Ill. employee used state computer in stock attacks

SPRINGFIELD, Ill. — Using a state computer on state time, an Illinois comptroller’s office employee posted hundreds of messages attacking the stock offerings and financial prospects of small companies, the office said Tuesday.

Comptroller Dan Hynes’ office said David W. Pippy was disciplined for improper use of a state computer and his Internet access was revoked. The office also referred the matter to state and federal securities regulators.

Pippy’s targets want more.

The companies are players in the murky world of “penny” stocks, where government oversight is limited and Internet rumors can quickly affect a company’s bottom line. They claim Pippy was trying to drive down stock prices.

“That’s illegal. It’s stock manipulation,” said Stephen Macklem, chief financial officer of Chicago-based Veltex Corp. “I’m shocked the comptroller’s office has done nothing else.”

Pippy declined to answer questions Tuesday, but issued a statement flatly denying he was trying to profit by driving down stock prices.

In posts on financial message boards, Pippy pointed out executives’ past legal problems, questioned their sales claims and argued they were cheating investors.

Pippy posted often — approximately 135 times in November and December for just one company on InvestorsHub.com, where he used the name “Sky-King.” The angry executives say he also went after other companies on other sites.

Shannon Zimmerman, an analyst for the financial Web site The Motley Fool, said that in the world of penny stocks, a single person has “the potential to wreak havoc.” Legitimate information about the companies can be so scarce that Internet comments, true or false, produce significant swings in stock price.

Pippy, of Springfield, makes $49,692 a year as a public service administrator in the comptroller’s office. He once served as president of an Illinois Federation of Teachers local that represents some comptroller employees.

The IFT has endorsed Hynes in the Democratic race for governor and has contributed to his campaign.

Hynes spokeswoman Carol Knowles said she could not disclose details about the Pippy case. But she said the office’s Internet policy allows punishments that include suspension and even firing, and that Pippy’s penalty was comparable to those for other employees with similar violations.

Knowles said there could be additional punishment if regulators determine Pippy did something illegal.