From This Week's Pick:
Attention all Subscribers: Enclosed please find an excellent written
synopsis of various Internet frauds plaguing the World Wide Web. It sums up
in one letter much of the advise we have been giving our subscribers for
some time now. We thank "Heavy Trading Group" for posting it. (we couldn't
have written it better ourselves) Remember none of us are perfect, we may
post our findings, but we also rely on all of you to tell us your findings
and give us your opinions good or bad. Never be shy or afraid to ask
questions...........We encourage you to email us at
analyst@thisweekspick.com
Here's the synopsis. Thanx again Heavy Trader Group!
You should be skeptical of investment opportunities you learn about
>through the Internet. When you see an offering on the Internet whether
>
>it's on a company's website, in an online newsletter, on a message
>board, or in a chat room you should assume it's a scam until you've
>done your homework and proven otherwise. Get the facts before you
>invest, and only invest money you can afford to lose. You can avoid
>online investment scams by asking and getting answers to these three
>
>simple questions:
>
> Where is the information coming from?
> Where is the company listed?
> How long have they been in business and are they profitable?
>
> The Internet serves as an excellent tool for investors, allowing them
>to
>easily and inexpensively research investment opportunities. But the
>Internet is also an excellent tool for fraudsters. That's why you should
>
>always think twice before you invest your money in any opportunity you
>learn about through the Internet.
>
> The Internet allows individuals or companies to communicate with a
>large
>audience without spending a lot of time, effort, or money. Anyone can
>reach tens of thousands of people by building an Internet web site,
>posting a message on an online bulletin board, entering a discussion in
>a live "chat" room, or sending mass e-mails. It's easy for fraudsters to
>
>make their messages look real and credible. But it's nearly impossible
>for investors to tell the difference between fact and fiction.
>
> On October 28, 1998, the SEC announced charges against 44 stock
>promoters caught in a nationwide enforcement sweep to combat Internet
>fraud. These promoters failed to tell investors that more than 235
>companies paid them millions of dollars in cash and shares in exchange
>for touting their stock on the Internet.
>
>"Not only did they lie about their own independence, some of them lied
>about the companies they featured, then took advantage of any quick
>spike in price to sell their shares for a fast and easy profit," said
>SEC Director of Enforcement Richard H. Walker.
>
>This alert tells you how to spot different types of Internet fraud, what
>
>the SEC is doing to fight Internet investment scams, and how to use the
>Internet to invest wisely.
>
> How do these people reach you:
>
>Online Investment Fraud:
>New Medium, Same Old Scam
>The types of investment fraud seen online mirror the frauds perpetrated
>over the phone or through the mail. Remember that fraudsters can use a
>variety of Internet tools to spread false information, including
>bulletin boards, online newsletters, spam, or chat (including Internet
>Relay Chat or Web Page Chat). They can also build a glitzy,
>sophisticated web page. All of these tools cost very little money and
>can be found at the fingertips of fraudsters.
>
>Online Investment Newsletters
>Hundreds of online investment newsletters have appeared on the Internet
>in recent years. Many offer investors seemingly unbiased information
>free of charge about featured companies or recommending "stock picks of
>the month." While legitimate online newsletters can help investors
>gather valuable information, some online newsletters are tools for
>fraud.
>Some companies pay the people who write online newsletters cash or
>securities to "tout" or recommend their stocks. While this isn't
>illegal, the federal securities laws require the newsletters to disclose
>
>who paid them, the amount, and the type of payment. But many fraudsters
>fail to do so. Instead, they'll lie about the payments they received,
>their independence, their so-called research, and their track records.
>Their newsletters masquerade as sources of unbiased information, when in
>
>fact they stand to profit handsomely if they convince investors to buy
>or sell particular stocks.
>
>Bulletin Boards
>Online bulletin boards whether newsgroups, usenet, or web-based
>bulletin boards have become an increasingly popular forum for
>investors to share information. Bulletin boards typically feature
>"threads" made up of numerous messages on various investment
>opportunities.
>While some messages may be true, many turn out to be bogus or even
>scams. Fraudsters often pump up a company or pretend to reveal "inside"
>information about upcoming announcements, new products, or lucrative
>contracts.
>Also, you never know for certain who you're dealing with or whether
>they're credible because many bulletin boards allow users to hide
>their identity behind multiple aliases. People claiming to be unbiased
>observers who've carefully researched the company may actually be
>company insiders, large shareholders, or paid promoters. A single person
>
>can easily create the illusion of widespread interest in a small,
>thinly-traded stock by posting a series of messages under various
>aliases.
>
>Consider all offers with skepticism. Investment frauds usually fit one
>of the following categories:
>
>The "Pump And Dump" Scam
>It's common to see messages posted online that urge readers to buy a
>stock quickly or tell you to sell before the price goes down. Often the
>writers will claim to have "inside" information about an impending
>development or to use an "infallible" combination of economic and stock
>market data to pick stocks. In reality, they may be insiders or paid
>promoters who stand to gain by selling their shares after the stock
>price is pumped up by gullible investors. Once these fraudsters sell
>their shares and stop hyping the stock, the price typically falls and
>investors lose their money. Fraudsters frequently use this ploy with
>small, thinly-traded companies because it's easier to manipulate a stock
>
>when there's little or no information available about the company.
>
>The Pyramid
>Be wary of messages that read: "How To Make Big Money From Your Home
>Computer!!!" One online promoter claimed that investors could "turn $5
>into $60,000 in just three to six weeks." In reality, this program was
>nothing more than an electronic version of the classic "pyramid" scheme
>in which participants attempt to make money solely by recruiting new
>participants into the program.
>
>The "Risk-Free" Fraud
>"Exciting, Low-Risk Investment Opportunities" to participate in
>exotic-sounding investments such as wireless cable projects, prime
>bank securities, and eel farms have been offered through the Internet.
>
>But no investment is riskier. And sometimes the investment products
>touted do not even exist they're merely scams. Be wary of
>opportunities that promise spectacular profits or "guaranteed" returns.
>If the deal sounds too good to be true, then it probably is.
>
>Off-shore Frauds
>At one time, off-shore schemes targeting U.S. investors cost a great
>deal of money and were difficult to carry out. Conflicting time zones,
>differing currencies, and the high costs of international telephone
>calls and overnight mailings made it difficult for fraudsters to prey on
>
>U.S. residents. But the Internet has removed those obstacles. Be extra
>careful when considering any investment opportunity that comes from
>another country, because it's difficult for U.S. law enforcement
>agencies to investigate and prosecute foreign frauds.
>
>
>If you want to invest wisely and steer clear of frauds, you must get the
>
>facts. Never, ever, make an investment based solely on what you read in
>an online newsletter or bulletin board posting, especially if the
>investment involves a small, thinly-traded company that isn't well
>known. And don't even think about investing on your own in small
>companies that don't file regular reports with the SEC, unless you are
>willing to investigate each company thoroughly and to check the truth of
>
>every statement about the company. For instance, you'll need to:
>
>•get financial statements from the company and be able to analyze them;
>
>•verify the claims about new product developments or lucrative
>contracts;
>
>•call every supplier or customer of the company and ask if they really
>do business with the company; and
>
>•check out the people running the company and find out if they've ever
>made money for investors before.
>
>Be careful and Good Luck!!
>
>HeavyTrader & Team
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