Michael and all:
A detailed article about how a promoter can seed the market with shares sold to investors, then sell unregistered shares into the hyped stock market (all without filing much documentation with the SEC). This should be required reading by all new investors:
From the Stock Smart Site
May 29, 1998
Rev up the hype
Everyone wants to know why the stock market keeps going up and up, month after month, year after year, as if up were the only direction in which a market can travel. But I know why this is happening. Really, I do. And we're not talking Newtonian physics running out of control, either. We're talking Greater Fools (by the millions) with money (by the billions) spilling out of their pockets. Ain't America great like that? We're seeing zero-to-hero stock offerings that materialize out of nowhere on Nasdaq's over-the-counter (Bulletin Board) market.
For a hearty endorsement of just that sentiment, we need look no further than a transplanted New Zealander, Murray Bailey, who heads a company called Advanced Engine Technologies Inc.
Now, granted, Advanced Engine is not exactly General Motors. In fact, it's not even a pimple on the posterior of a General Motors Superfund dumpsite. The fact of the matter is, Advanced Engine has exactly one employee on the payroll and more or less $600,000 in its checking account. Its prize asset is the aforementioned Murray, our hero from New Zealand, who, according to recent sightings, seems to spend day and night crisscrossing the Midwest in a 40-foot R.V. with his wife in the back and the seats filled with some mysterious engine thingamajig that he says is going to revolutionize the auto industry and change life as we know it at millennium's dawn.
All of which helps explain why Murray's company, Advanced Engine of Englewood, Colo., and Albuquerque, N.M. - or for that matter, wherever Murray parks the Winnebago - sold shares in a penny stock offering last December, raised all of $1 million at $1 per share and recently boasted a stock price of $26 and a Wall Street market capitalization somewhere north of $500 million. Like I said, in the great bull market of the late 1990s, the streets of America are overflowing with dopey investors.
We're seeing this sort of thing in the securities markets every day now - the zero-to-hero stock offerings that materialize out of nowhere on Nasdaq's over-the-counter (Bulletin Board) market. They surge in value on extreme claims that get hyped all over the Internet before they collapse as the insiders begin selling out of their holdings into the rising market.
On Wall Street they're known as pump-and-dump operations, and they tend to proliferate in late bull-market cycles when investors begin throwing money at every new deal that comes along in the belief that trees really do grow to the sky. Which brings us to Murray Bailey and Advanced Engine, a company that claims to have the licensing rights to some kind of itty-bitty rotary engine thing that, to hear Murray tell it, will revolutionize the entire world of internal combustion engines. "It's amazing!" cries Murray.
He was a professional deal-promoter, the sort of fellow who would take young start-up companies, and, for a piece of the action, try to scrape up a grubstake to help them get going.
You can read all about Murray and his marvelous machine by logging onto the Internet and checking out a Web site called Silicon Investor. There you'll find long chat sessions in which somebody named Greg tells how the machine was invented in a garage somewhere in New Zealand by a chap named Steve, and how his neighbor, Murray, took one look at the thing and said, "Hey ... that bloomin' thing is going to revolutionize the world!" - or words to that effect.
What the chat sessions don't reveal is that back in his New Zealand era, Murray was more than the boy next door. He was a professional deal-promoter, the sort of fellow who would take young start-up companies, and, for a piece of the action, try to scrape up a grubstake to help them get going. In any case, it wasn't long before Murray had arranged to bring the revolutionary engine to America and promote it to the auto industry. "It's amazing," Murray told me in an interview, "we're going to change the way people think about the internal combustion engine!"
.....More at:http://www.stocksite.com/features/contrarian/
The SI thread referred to is: exchange2000.com
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