Re: 8/14/00 - [ICD.V] Sleuths on to chat-room scams
Sleuths on to chat-room scams
BRIAN LEWIS
Vancouver Province
Buying a stock based on a hot tip from an Internet chat room is a financial risk, but posting a tip containing false information puts your freedom at risk.
Regulators and law-enforcement agencies across Canada are cracking down on culprits who post false information on the Internet using a scam known as "pump and dump" to boost the price of stock they own. Once unsuspecting investors buy the "story" and bid up the stock's price, the culprit sells at a substantial profit.
"This is becoming a serious and growing problem so we're watching it more closely now," said Dean Pelky, spokesman for the B.C. Securities Commission.
"We're also telling investors to be very, very cautious about the information on stocks they pick up from chat rooms."
The BCSC has been working on one chat-room case since February when a Canadian Venture Exchange-listed company, International CoroMandel, became a victim of a chat-room scam.
The unknown perpetrator, who has been traced to a computer lab at Fanshawe College in London, Ont., simply took a legitimate press release that told of two companies negotiating a merger and substituted CoroMandel's name for one of them. The bogus press release was then posted.
CoroMandel had to issue a retraction and the file was handed over to the BCSC for investigation.
"We're still investigating, but the computer lab at the college did not have a sign-in procedure so there's no way of identifying the culprit," Pelky said. But the BCSC also has posted notices on various chat lines asking for help in this case from the public via its special E-mail address, tips@bcsc.bc.ca, which is available for any stock-fraud tips.
A case has surfaced in Quebec in which the provincial securities commission is investigating a complaint that an employee with TD Evergreen, the Toronto-Dominion Bank's full-service brokerage, attempted to manipulate shares in a Montreal company.
The individual's E-mail address was traced to a TD Evergreen office in Quebec and TD Evergreen also is investigating.
The cases show that provincial regulators are spending more time monitoring and using the Internet in a bid to catch scam artists. Specialized computer software also is being used to assist them.
Pelky said investors who use chat lines should know the difference between expressing your opinion on a stock, which is legal, and posting false information, which is illegal under the Criminal Code and carries a jail term of up to five years.
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