Sitestar Corporation, Frederick T. Manlunas and Clinton J. Sallee

Litigation Release No. 17541 / June 5, 2002

Securities and Exchange Commission v. Sitestar Corporation, Frederick T. Manlunas and Clinton J. Sallee, 1:02CV01089 (D.D.C.) (June 5, 2002)

SEC CHARGES SITESTAR CORPORATION WITH TENDER OFFER RULE VIOLATION AND TWO OF ITS OFFICIALS WITH INSIDER TRADING

The Securities and Exchange Commission announced today the filing of a settled civil action against Sitestar Corporation and two of its officials, Frederick T. Manlunas and Clinton J. Sallee. Between August and October 2000, Sitestar announced tender offers to purchase all of the outstanding shares of Mothernature.com, Inc. and Fashionmall.com, Inc. The Commission's complaint alleges that Manlunas and Sallee engaged in insider trading by purchasing and selling shares of both target companies while in possession of material, nonpublic information relating to the tender offers. The Commission's complaint also alleges that Manlunas and Sitestar committed a separate violation by purchasing Mothernature.com stock on the open market while that tender offer was pending.

Manlunas consented to be permanently enjoined from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5, 14e-3 and 14e-5 thereunder, to disgorge trading profits of $7,650, and to pay an insider trading penalty of $7,650 and a $10,000 penalty for his violation of Rule 14e-5. Sallee consented to be permanently enjoined from violating Section 17(a) of the Securities Act and Sections 10(b) and 14(e) of the Exchange Act and Rules 10b-5 and 14e-3 thereunder, to disgorge trading profits of $1,863, and to pay an insider trading penalty of $5,000. Sitestar also consented to be permanently enjoined from violating Section 14(e) of the Exchange Act and Rule 14e-5 thereunder. Manlunas, Sallee and Sitestar neither admitted nor denied the allegations set forth in the Commission's complaint.

SEC Complaint in this matter.