From the Sunday New York Times Business Section Front Page
February 7, 1999, Sunday
Money and Business/Financial Desk
Touts
By GRETCHEN MORGENSON
WHILE the Dow industrials hardly budged last week, shares of a group of lesser-known companies, including J. B. Oxford Holdings and Siebert Financial, were moonshots. Traders watched the stocks double or more in the course of a day on no news whatsoever.
What or who was behind the moves? The ''what'' is the Internet. Siebert Financial, a discount brokerage firm in New York, and J. B. Oxford, a rival in Los Angeles, got hot because they are both on line. Siebert ran from $19.125 on Monday to $49.50 on Wednesday, then dropped back to $35.125 at week's end. J. B. Oxford, which is, by the way, under investigation by the Securities and Exchange Commission for possible market manipulation, closed on Wednesday at $12 and on Thursday made a high of $25.75 before ending the week at $11.75.
More interesting is the ''who'' behind the activity. It seems to be ''Merlin,'' a man posting stock picks in an Internet chat room called trading-places.net.
Outside of cyberspace, Merlin is a Scotsman named Chris Rea, 45; he is pictured on the Web site aboard a yacht. Mr. Rea said on Friday that he founded Trading Places last September. It is a Web site for day traders, the histrionic types who furiously buy and sell stocks through the day. He calls the company a ''facilitator of trader training and trader communications on the Internet.''
In less than six months, Mr. Rea said, he has drawn 817 members to his site who pay $279 a month to get instruction in day trading and access to Merlin's stock picks.
But Mr. Rea's reach also extends to thousands of people who learn of his picks indirectly, from friends or other traders. Net watchers say that helps explains the violent moves in stocks he pushes.
Before the market opened on Friday, Mr. Rea said, he recommended Omega Research, a Miami maker of financial analysis software. The stock was at $5.25. ''Within half an hour, it ran to $10,'' he said. Never mind that the stock fell back to $7. ''Right now we're promoting IMON,'' Mr. Rea added on Friday morning. That's the ticker symbol for Imaginon Inc., a small software maker in Greer, S.C. ''We made it rock,'' Mr. Rea said. The stock rose 25 percent that day.
On-line investing is rife with dubious characters, Mr. Rea said; by contrast, he added, ''we see ourselves as being the white knight in this industry.'' Still, one member of his site who is a professional trader says that the enthusiastic Mr. Rea rarely tells people when to sell -- a problem, given that the stocks inevitably fall after their spikes.
Mr. Rea declined to discuss his background, other than to say that he was a trader for years in London, moved to Spain and then came to the United States 10 years ago. Five years ago, he was in the business of designing and producing mailers for car dealerships. He is not a registered broker.
As essentially a publisher of financial information, he is generally exempt from regulation. Only if he were found to be buying ahead of his customers or taking money from the companies whose shares he recommends would he be subject to regulators' wrath. He says he does neither. And indeed, Trading Places is filled with effusive testimonials to Merlin's magic.
So this is the way we live now. Thousands of people from all over the nation buy stocks on the advice of a stranger known only by his alias and a blurry picture. Strange days. Strange days, indeed.
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btw- Gretchen also wrote a good one with some info on Tony in Forbes... Tony doesn't like me sharing this with anybody because the article isn't favorable...
phactor.com
Forbes:
Taking Investors For A Ride, 7/29/96
Getting into over-the-counter stocks is easy. But when it comes time to sell, who will buy these hot Nasdaq issues?
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One day soon the music's going to stop
By Gretchen Morgenson
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Hint....hint....
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