Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Can SI Members Really Manipulate Stocks? -- Ignore unavailable to you. Want to Upgrade?

To: Arcane Lore who wrote (402)	9/1/1999 12:10:00 PM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 461

Run-Up in Linux Concerns Reprises Frenzy in Net Issues By SUSAN PULLIAM Staff Reporter of THE WALL STREET JOURNAL Another week, another bubble. This week's feeding frenzy among Internet day traders has developed around stocks associated with Linux, the computer operating system that was developed by computer hackers and which many technology experts believe could eventually pose a challenge to Microsoft's Windows. Tuesday, some of the air was let out of the bubble, with nearly all of the Linux stocks -- including Applix, Corel and Ariel -- giving back some of their gains from the run-up, which began on Friday and accelerated on Monday. Applix, which stood at around 8 before its recent run-up, closed at 14 11/16, down 3 15/16, or 21%. Corel, which traded at around 4 last week, closed at 5 3/4, down 5/8, or 9.8%. And Ariel, which was at about 2 before its big rise, closed at 4 7/16, down 2 1/8, or 32%. Applix and Corel had finished Monday among the day's top-10 winners, with gains of 12.8% and 13.3%, respectively. The run-up in Linux stocks provides the latest example of the powerful explosion that can happen in a group of stocks when Internet chat rooms embrace an idea. It also, undoubtedly, has left some investors wondering what hit them. Almost as abruptly as they began talking up Linux stocks, Internet chat rooms dropped the stocks like a hot potato. That has left some day traders -- those investors who rapidly hop in and out of stocks, sometimes within minutes -- wondering whether the stocks are headed back to their pre-frenzy levels. etc. interactive.wsj.com - Jeff

To: Arcane Lore who wrote (402)	11/2/1999 5:20:00 PM
From: Arcane Lore	Read Replies (2) \| Respond to of 461

Heard on the Street SEC Studies 'Momentum' Stock-Pick Sites on the Web By REBECCA BUCKMAN Staff Reporter of THE WALL STREET JOURNAL [...] But the enforcement division of the SEC says it is investigating a host of Web sites that offer daily or periodic stock recommendations designed to generate "momentum" in certain stocks from quick-fingered day traders and other investors. The often-artificial gyrations could in some cases be considered stock manipulation, SEC officials say, particularly if Web-site operators are profiting from the ups and downs themselves. "We're aware of quite a few of these [sites], and we have quite a few of them under investigation," says John Reed Stark, chief of the SEC's office of Internet enforcement. "We're not blowing smoke." Richard Walker, the head of the SEC's division of enforcement, adds that such sites "have enabled people to artificially impact the market in increasingly shorter periods of time ... this is an area of concern." The SEC declined to name specific sites under investigation, but the commission is expected to soon bring enforcement actions against some momentum-trading operations. [...] With all momentum sites, the main concern of regulators is that site publishers could buy shares of companies before they tout them, and then sell out once they generate enough momentum for the stocks to rise. This activity, of course, would leave other investors holding the bag. Such a strategy is a variant on the classic "pump and dump" scenario. Then, stock promoters or insiders artificially bid up the price of a stock-perhaps by paying for a tout in a stock newsletter, or releasing a news release with false information -- and then dump their shares, taking hefty profits. Tiny companies with few shares outstanding are the easiest to manipulate. But with the new momentum sites, companies and their promoters don't even have to be involved, Mr. Stark says. The flood of activity unleashed by the new breed of day traders buying the sites' picks can be enough to goose the stocks. It brings the chances for stock manipulation "to a new level," says Mr. Walker. [...] Without commenting on any site under investigation, Mr. Stark says generally that "a disclaimer doesn't mean it's not a fraud." In their investigation, regulators are examining potentially false and misleading information issued as part of the recommendations, such as far-fetched growth prospects or bogus business deals, which in itself could constitute fraud. [...] interactive.wsj.com (The full article mentions a number of specific sites including one called "Arthur Levitt's Stock Picks" (a Yahoo stock club). Needless to say the chairman of the SEC is not affiliated with the site.)