Your name in print:
New Economy Great for Stock Manipulators Too: Susan Antilla
New York, March 16 (Bloomberg) -- All the press devoted to
the productivity miracles of the New Economy has overlooked one
industry.
The high-tech stock manipulation business.
In the old days, penny-stock cons had to work for their
money. There was the hassle and expense of setting up a boiler
room, hiring and training a collection of recent college grads
and investing in phone networks to dial unsuspecting suckers. To
say nothing of the expensive lawyers to defend themselves once
the regulators caught on.
Today, though, the principals of defunct boiler rooms like
Stratton Oakmont of Lake Success, New York, no doubt are kicking
themselves as they watch a new generation mimic their success
with none of the muss and fuss of office leases, weekly payrolls
and telephone banks.
''Why would you dial up one person at a time when you can
reach 60 to 70 million with a few keystrokes?'' muses Bill
McDonald, assistant commissioner of the enforcement division at
the California Department of Corporations.
The new-style scam: ''traders'' pages on the Internet, where
anonymous hypesters can tout their stocks with high confidence
that not even the regulators can find them.
Most recently, investors have been falling for the Web hype
coming from a site called bigtrades.bizhosting.com, though the
touts don't sign their names and there is no way to inquire about
them.
Bigtrades.bizhosting, in turn, has been talked up on several
Internet discussion groups with the effect of whetting investors'
appetites about questionable investments, and the efforts to get
the word out on bigtrades.bizhosting's influence has paid off.
The Latest
A tout yesterday caused a surge in volume and price of Omni
USA Inc., a maker of gear drives and trailer-towing components.
Michael Zahorik, executive vice president at Omni USA, said, ''I
couldn't tell you'' what prompted the action.
Investors who try to divine the identity of these latest
touts will reach nothing but dead ends. A ''pump and dump''
operation using the Web to supplement its ''marketing'' plan? A
more modern hype in which a promoter facilitates big shareholders
who want to get rid of some inventory? Bigtrades.bizhosting
leaves it all to the reader's imagination.
The Omni USA rally was not the first time an officer of a
public company would be professing to know nothing about an
unprecedented spike in the shares of his company inspired by this
Web site.
Scott Halperin, chief executive officer of Saratoga Brands
Inc., a specialty food importer that trades under the symbol
STGA, commented that he was unaware of the existence of
bigtrades.bizhosting until after shares of his company soared 47
percent within minutes of a 3:30 p.m. recommendation of Saratoga
on the Web page on March 9.
Fast Move
Halperin says he was just completing a physical examination
by an insurance company doctor late that day when he turned on
his computer and saw a stock price so unbelievable that he
figured ''something messed up the data.'' Still, he didn't stay
in the dark all that long: before the day's close minutes later,
he says he managed to sell 10,000 shares.
(Saratoga wound up closing at the same 94 cents a share
where it had closed the previous trading day. But volume on March
9 was 957,100 shares, up from a more typical 11,400 the day
before).
Another bigtrades tout, Microwave Filter Co., rose from
$1.125 to $3.25 after a 3:30 p.m. tout on March 8, only to close
at $2. Volume soared to 248,100 shares from 1,000 shares on the
previous trading day. It closed at $1.13 yesterday.
''We don't have any reason why the activity was, or what it
was,'' said Dick Jones, chief financial officer of Microwave
Filter, a maker of electronic filters for radio and microwave
frequencies. Jones said he had not heard of bigtrades.bizhosting.
While Jones said on March 11 that ''we're looking into it,'' he
added that the company hadn't yet searched Internet discussion
groups to see whether Web hype had played a part.
Telegraphed
Yet the movement in Microwave was discussed on at least two
discussion sites on Go2Net Inc.'s Silicon Investor last week,
including a site devoted to Microwave Filter. ''Yesterday's
action in MFCO was obviously a day trader scam and had nothing to
do with the value of the company,'' wrote one message poster in
the Silicon Investor group ''Post Your Short Term Picks.''
There is no biographical material about the person or
persons behind bigtrades.bizhosting on the Web site. Bloomberg
sent e-mails to the ''Webmaster'' of the page, but got no
response. A search on the Internet to determine the owner of the
site brought Bloomberg to Marketing Allied Services of Salt Lake
City, a company whose Direct Connect subsidiary gives out free
Web pages ''to anyone who would like one,'' according to Mike
Handy, who is in charge of handling complaints about such
problems as pornography and ''spam'' e-mails on the pages.
Handy says that, like Direct Connect's hundred or so
competitors, his company doles out Web pages without asking for
telephone numbers or names, and in exchange gets to run
advertising on the users' Web pages. He knows only the e-mail
address and an Internet identification known as the ''IP''
address of those users, neither of which he will divulge.
No Call
He was willing to say, though, that bigtrades.bizhosting has
been around since March 5, and that he had not been contacted by
the Securities and Exchange Commission with regard to the
bigtrades site.
It's surprising that he hasn't since another Web page
registered with Direct Connect's parent company seems to have run
into regulatory trouble.
A page that's called bigtrade -- singular -- .bizhosting is
publishing nothing but a full-screen message saying, ''The
bigtrades website has been suspended as per investigation by the
United States Securities and Exchange Commission.'' Despite the
mysterious shutdown of a page with a nearly identical name to the
bigtrades (plural) page that's still in operation, an SEC
spokesman said he knew of no action against bigtrade or
bigtrades.
HiSpeed and Skycat
Several people who seem to know at least something about
bigtrades, though, are Internet message posters who go by the
names HiSpeed, jeff Strum and Skycat. HiSpeed wrote on the
Silicon Investor message board ''Tiger Investor'' at 4:20 p.m.
March 8 that ''This site rocked today,'' posting the address of
bigtrades.bizhosting.com. He was back in action on another
Silicon Investor message board ''Short Term Picks From the Whiz
Kid'' at 12:05 a.m. on March 9, noting that he'd been impressed
by bigtrades, again posting bigtrades' e-mail address.
By 8:42 a.m. on March 9, jeff Strum was posting the bigtrades
e-mail address yet again on the Whiz Kid board, noting the big
run-up following the previous day's recommendation, and that a
new tout was expected at 3:30 that afternoon. At 5:36 that
evening, Skycat would be telling jeff Strum that he was right
about bigtrade's power, but that ''all should be careful''
because the picks tanked as quickly as they soared.
That didn't stop Skycat, though, from praising the page
hours later on the Saratoga Brands discussion group on Silicon
Investor, where he said there might still be hope for a good
price on Saratoga, given that day's rally. HiSpeed talked it up
yet again on March 10 on the discussion page ''Tiger Investor,''
saying, ''Their pick rocked on Monday but Tuesday pick fizzled
rather quick. But that one did have 2x float of first one, too.''
Neither bigtrades nor bigtrade -- its similarly named cousin
with the ''suspended'' per SEC notice -- returned e-mails from
Bloomberg. Bigtrades, plural, though, did add a little something
to its disclaimer over the weekend, which might suggest some
awareness of regulatory risk to which it's exposed.
''Investors are urged to analyze the movement and behavior of
previously profiled stocks,'' it wrote -- a ''full disclosure''
legal cover it might use as protection in the event regulators
can track the hypesters down.
The suspicious spikes in their touts may be news to the
rubes following their advice to buy. But smart money says that
the lucky sellers didn't need any help understanding the
bigtrades game. |
