Miami, FL, May 4 /SHfn/ -- The continued explosive growth of online
message boards often victimize the novice
investor. Notorious posters cloaked in the anonymity of a chat forum can
easily deceive many first-time visitors
to message boards. The StockHouse.com ® RapidResponse ™ team has
identified 9 Red Flags that may
help prevent being misled.
Who is the name behind the message your are reading? In many cases, you
will never know. Dishonest posters
can fool even the "respectable" message boards. One leading message
board claims their $50 registration fee
eliminates such dirty tricks, but many stock manipulators get around this by
sending in $50 money orders,
instead of surrendering their credit card numbers.
The checklist below offers some of the ways you can spot manipulative
posters. The list is more of a rating
system than absolute con-artist detection list. The greater the number of
violations by a poster, the more likely
he or she is promoting the stock for some ulterior motive. One or more
violations do not necessarily mean the
poster is a stock promoter, but continued violations over many stocks may
identify someone as such a person.
StockHouse has introduced a "VOICE YOUR OPINION" module, found in the
username's profile. You can help
the RapidResponse ™ team in separating the illicit posters from the honest
investor by commenting on such
imposters. Just click on the User Name. When the profile appears, click the
"Voice Your Opinion" line and type
in your message.
By the way, not all fraudulent posters are bullish - some post to drive shares
in the stock lower either with a
vendetta or to profit by shortselling.
THE RED FLAG CHECKLIST
1. Someone who hyper-posts on only one stock.
During the promotional run of that stock, he may be posting between 8 and
20 messages daily (sometimes
more). He will promote for only so long until he has exercised the stock
options that he has been paid to
promote the stock or until his cash contract with the company expires.
2. Someone who uses multiple identities.
This is hard to detect. Generally, the poster will run with one identity until he
has become despised on the
message boards. Then, he will register again with a new identity. If one
carefully studies such an individual, it
will be found that he posts repeatedly about the same set of stocks, or just
one stock. He will post during the
same time each day or night. His messages will commonly be the same
length. His writing style will be similar
and he will use the same phrases or key words in his messages. Often, this
is the hired promoter. He is paid to
post on message boards throughout the Internet, either in cash or stock
options.
3. Someone who repeatedly attacks or belittles others on a stock's message
boards.
This goes beyond the simple heated debate with one or two members who
disagree with him. If you carefully
read his messages, this promoter will sound like he is fighting for his life
--with nearly everyone who challenges
him. This might be the CEO or investor relations employee for the company
or it could also be a hired promoter.
4. Someone who emerges as the stock's moderator, or even the leader of
the discussion group or that stock.
This person is different from someone who has a genuine fundamental
understanding of the company and who
is also helpful. A promoter/leader will diligently answer to virtually every
negative comment made on "his"
message board. He will also cheerlead every positive comment and
constantly make an appearance on the
message board to "show" he is still the boss. Again, a paid promoter.
5. Look for the poster, with a short history in their member profile, who
suddenly shows up during a stock runup, and
appears to know "all about" the company.
This person is different from the excited investor, who just bought shares in
the company and is enthusiastic
about it. The impostering poster hints at "inside information" and quickly
name-drops some connection to a
company insider or employee. While the "excited" investor may rave about
something an investor relations
employee told him, the imposter hints at important, but as of yet
unannounced, development(s) that may impact
the stock price.
6. Someone who is nearly always the first to respond to company
developments.
Occasionally, someone else will beat him to it. Otherwise, he's first or a close
second almost every time. Paid
promoters are paid to be on their toes. Commonly, he will positively spin the
news, to soften the blow of less
than good news or to make good news appear better than it actually is.
7. Someone who continuously hints at upcoming company developments,
unreleased company news, unannounced
contracts and forecasts discoveries in natural resource exploration stocks.
Where did he get his information? Usually, he is the one who starts the rumor
and might often state that he
heard it from someone else. Yes, he did - a company insider. This is where
the old cliché (Buy on the rumor; sell
on the news) comes from: the company insider who leaked the news. Paid
promoter or company insider or
long-term and trusted follower, who is also a significant shareholder.
8. Someone who hypes the company during the runup and then "changes"
his mind and begins attacking the
company, the company insiders and the project.
This individual is different from the enthused investor who realized he was
just scammed. That person is less
controlled in his emotions, which is evident in what they write in their
postings. The hypester carefully controls
his statements, both up the chart and back down. On the way up, he may help
the stock move higher by adding
to the cheerleading, so that he can build a substantial short position. Once he
changes his mind, it stays
changed, though. The "excited" investor is confused and sounds it, when you
read his messages. The latter
hasn't the slightest doubts about his position on the company.
9. Someone who goes out of their way to find bad news about the company
and makes a "case" out of it.
These individuals might include ex-friends, ex-family (divorced) and
ex-employees, including ex-promoters.
Such people don't just post a single negative item. They either take one
negative and make it look like "the sky
is falling" or they continuously bring it up. That an individual makes frequent
appearances to vent their spleen is
the clue, which gives them away. Disgruntled investors usually move on and
don't want to be reminded of their
bad investment.
One way to cross-check the message board postings to determine if there is
an escaped fraudulent
manipulator at large is to compare his posts against the company news
releases. The fraudulent companies
generally amplify their slightest achievements and play down their failures.
Companies with a history of failures -
running a company into the ground, never achieving anything of merit and
diluting their market value through the
repeated issuance of new shares via private placements or secondary
offerings - tend to hire the most
egregious and unscrupulous promoters.
The above 9 Red Flags are by no means a complete list of warnings signs
and should only be used as
guidelines to protect yourself from fraudulent messages and posters.
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