UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Plaintiff, United States Securities and Exchange Commission ("SEC") for its complaint against Nikolai Safavi ("Safavi") alleges as follows:

SUMMARY

1. This action concerns the publication on the Internet of a fake "Reuters" news report falsely announcing, among other things, that Sina Corporation (SINA), a company whose shares trade publicly on the NASDAQ National Market System, received a "Market Underperform" rating in a newly issued Goldman Sachs research report. Safavi, the individual who published the fake news item, had acquired a short position in SINA stock days earlier, so that he would profit if the price declined. In fact, within an hour of the story's publication, SINA stock dropped in price by more than 3 percent. By engaging in this conduct, Safavi knowingly or recklessly violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder.

JURISDICTION AND VENUE

2. The SEC brings this action pursuant to authority conferred by Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78u(d)].

3. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 77u(e) and 78aa]. Safavi directly or indirectly, singly or in concert, has made use of the means or instrumentalities of transportation or communication in, or the instrumentalities of, interstate commerce, or of the mails, in connection with the transactions, acts, practices, and courses of business alleged in this complaint.

4. Venue lies in this district pursuant to Section 27 of the Exchange Act, 15 U.S.C. § 78aa. Certain of the transactions, acts, practices and courses of business constituting the violations alleged herein occurred within the District of Columbia.

THE DEFENDANT

5. Safavi, age 40, works and resides in San Francisco, California. For more than four years Safavi has used various screen names to post messages on the Yahoo! Finance stock discussion boards.

SAFAVI'S VIOLATIVE CONDUCT

6. On Friday, October 24, 2003, Safavi sold short 1,000 shares of SINA common stock at $42 per share. As a short seller, Safavi borrowed the 1,000 SINA shares that he sold, and agreed to acquire an equal amount of SINA shares at a later date to pay back the lender.

7. Safavi stood to profit if the price of SINA common stock dropped below $42 per share. Conversely, Safavi stood to suffer a financial loss if the price of SINA common stock rose above $42 per share. In addition, each day Safavi maintained his short position, he was required to pay interest on the value of the borrowed shares.

8. On Monday, October 27, shares of SINA common stock traded at prices between $42.35 and $43.88.

9. On October 28, 2003, the market for SINA common stock opened at $45.60 per share, $3.60 per share higher than the price at which Safavi had sold short.

10. At 12:58 p.m. EST on October 28, Safavi, under a screen name, made false and misleading statements on the Yahoo! Finance message board specifically dedicated to the discussion of SINA, claiming among other things that Goldman Sachs had initiated coverage of SINA with a "Market Underperform" rating "because of valuation." The statements were made in the form of a Reuters news story and listed two actual Reuters news reporters as the authors. The text of Safavi's message read:

Goldman Sachs Asia Initiate Coverage
By Doug Young and Eric Auchard
HONG KONG/NEW YORK, Oct 28 (Reuters) - Goldman Sachs issued a research report on several China-focused Internet media firms, including Sina Corp (SINA - news). The report is bullish on long-term internet usage and market growth for such companies, and predicted strong revenue growth for Chinese internet market participants. Coverage of SINA was initiated with Market Underperform because of valuation. The report said: "while we are confident revenues and long-term earnings for SINA will increase sharply in the next five years, we believe current equity values are inflated". Shares of SINA opened up sharply at $45.60 on the back of strong quarterly results.

11. At the time Safavi posted the fake news release, the Yahoo! Finance message board dedicated to the discussion of SINA contained more than 90,000 postings.

12. Just prior to Safavi's, posting SINA common stock was trading at $44.55 per share. Immediately after the posting, shares of SINA began trading lower. By 1:27 p.m. EST on October 28, the share price of SINA had dropped to $43.15.

13. Moments after posting the false message, Safavi made several attempts to post corrective statements, but failed because he was unable to regain access to the screen name that he had used to post the false message. Safavi then e-mailed Yahoo! several times requesting that the message be removed or deleted. Safavi followed his written requests with a telephone call to Yahoo! Safavi made no attempts to post a corrective message under any other screen name.

14. On October 28, at approximately 4:00 p.m. EST, CNBC reported that the posting was a hoax, that Reuters had not published the story, and that Goldman Sachs did not cover SINA.

15. On the evening of October 28, after the trading markets closed, Safavi cancelled a prior arrangement to cover his short position using a $37 per share limit buy order, and replaced it with a $42 per share limit buy order. That order was executed on the morning of October 29 at $41.65, resulting in profits to Safavi of $350.00 before transaction costs and interest.

CLAIM FOR RELIEF

16. The SEC incorporates by reference Paragraphs 1 through 15 above.

17. Defendant has, by engaging in the conduct set forth above, directly or indirectly, by use of means or instrumentalities of interstate commerce, or of the mails, or of a facility of a national security exchange, with scienter: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or (c) engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit upon other persons, in connection with the purchase or sale of securities.

18. By reason of the foregoing, defendant, directly or indirectly, violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5] and unless enjoined will continue to violate Section 10(b) of the Exchange Act and Rule 10b-5.

PRAYER FOR RELIEF

WHEREFORE, the SEC respectfully requests that this Court enter a judgment that:

I.

enjoins Safavi from future violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5];

II.

orders Safavi to pay a civil money penalty pursuant to Section 21(d)(3) of the Exchange Act, [15 U.S.C. § 78u(d)(3)]; and

III.

grants such other relief as this Court deems just and proper.