Re: 1/30/02 - MSNBC: Internet stock buyer beware; Web allows greater risk of bogus financial offerings
Internet stock buyer beware
Web allows greater risk of bogus financial offerings
by Lisa Napoli
A recent poll by Harris Interactive predicts that in the next six months, the number of online investors will grow two thirds to 8.6 million people. With more people using the Internet as a tool to research, buy and trade stocks-more caution than ever is needed. MSNBC Internet Correspondent Lisa Napoli filed this report about one of the most tricky forms of financial scams there is.
Lisa Napoli reports on stock market scams on the Internet and how to avoid them.
THE INTERNET TURNS anyone with a computer and a modem connection, guys like 26-year-old computer programmer Brian Levine, into a stock trading financial independent. Even if trading isn’t their line of work. “Everyone wants to get in on IPOs and buying Internet stocks, I’m able to sit at work, look at the ticker on my desk, and act on it immediately,” says Levine.
But with the increase in people trading stocks comes an increase in people trying to take advantage of them. Online, no one knows if you’re a bona fide financial guru dispensing words of wisdom or if you’re a scam artist.
More frequently these days, scams come in the form of an unsolicited email, known as spam. Often, it’s chatty and familiar in its tone, like this one, that sounds as if a friend sent it along. I don’t know someone with this screen name, but look at this message:
“Hey check this stock out, I think it will pop!”
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Seen a potential on-line fraud? Tell the SEC about it with their online complaint from: sec.gov
“Everyone wants to get in on IPOs and buying Internet stocks, I’m able to sit at work, look at the ticker on my desk, and act on it immediately.”
— BRIAN LEVINE
Computer Programmer
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These kinds of suspicious stock tips are proliferating online, say officials at the Securities and Exchange Commission, the governmental agency that administers federal security laws. Though they look like they’re coming from an unbiased source, these e-mails may actually be from the company being touted or from someone who has a substantial holding in it .
There are bogus offerings of stock in companies that don’t exist at all — offerings of stock based on hype and inaccurate information, attempt at manipulations over the Internet.
The tricks aren’t new. Before the Net, shysters used to set up telephone banks to call would-be investors to pass along bogus tips. But with the Internet, news travels fast-and anonymously. And tracking down the perpetrators is like chasing a ghost.
The SEC says it is trying to keep a watchful eye. Last year it started an office of Internet enforcement, where more than 200 people surf the Net looking for potential problems.
But some say the government isn’t moving fast enough to keep up with the volume and speed of stock trading schemes, which proliferate at warp speed on the Internet.
“The whole notion that people can go out and trade online without being thoroughly educated and experienced is really ridiculous. But it’s happening,” says Kevin Lichtman, who runs an financial advice Web site. “People are being encouraged to trade online. There really is no mandatory consumer education,” he says.
And until there is, or until the government finds a way to control the program, traders have to be wary of online offers that sound just too good to be true.
msnbc.com |
