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Microcap & Penny Stocks : TGL WHAAAAAAAT! Alerts, thoughts, discussion. -- Ignore unavailable to you. Want to Upgrade?

To: Jim Bishop who wrote (58269)	8/7/2000 10:31:50 AM
From: SSP	Respond to of 150070

I need to go get my Starbucks soon!

To: Jim Bishop who wrote (58269)	8/7/2000 10:56:47 AM
From: CIMA	Read Replies (1) \| Respond to of 150070

Sleuths on to Chat Scams vancouverprovince.com Sleuths on to chat scams 'Pump and dump' game uncovered Brian Lewis The Province Buying a stock based on a hot tip from an Internet chat room is a financial risk, but posting a tip containing false information puts your freedom at risk. Regulators and law enforcement agencies across Canada are cracking down on culprits who post false information on the Internet using a scam known as "pump and dump" to boost the price of stock they own. Once unsuspecting investors buy the "story" and bid up the stock's price, the culprit sells at a substantial profit. "This is becoming a serious and growing problem so we're watching it more closely now," says Dean Pelky, spokesman for the B.C. Securities Commission. "We're also telling investors to be very, very cautious about the information on stocks they pick up from chat rooms." The BCSC has been working on one chat room case since February when a Canadian Venture Exchange-listed company, International CoroMandel, became a victim of a chat room scam. The unknown perpetrator, who has been traced to a computer lab at Fanshawe College in London, Ont., simply took a legitimate press release that told of two companies negotiating a merger and substituted CoroMandel's name for one of them. The bogus press release was then posted. CoroMandel had to issue a retraction and the file was handed over to the BCSC for investigation. "We're still investigating, but the computer lab at the college did not have a sign-in procedure so there's no way of identifying the culprit," Pelky said. But the BCSC also has posted notices on various chat lines asking for help in this case from the public via its special e-mail address [tips@bcsc.bc.ca], which is available for any stock fraud tips. A case has surfaced in Quebec where that province's commission is investigating a complaint that an employee with TD Evergreen, the Toronto-Dominion Bank's full-service brokerage, attempted to manipulate shares in a Montreal company. The individual's e-mail address was traced to a TD Evergreen office in Quebec and TD Evergreen also is investigating. The cases show that provincial regulators are spending more time monitoring and using the Internet in a bid to catch scam artists. Specialized computer software also is being used to assist them. Pelky says investors who use chat lines should know the difference between expressing your opinion on a stock, which is legal, and posting false information, which is illegal under the Criminal Code and carries a jail term of up to five years.

To: Jim Bishop who wrote (58269)	8/7/2000 10:58:55 AM
From: CIMA	Respond to of 150070

Risk and Penny Stocks vancouverprovince.com Risk and penny stocks The Province Brian Lewis The Province Ric Ernst, The Province / B.C. Securities Commission executive director Stephen Wilson has warnings about workings of penny stocks. Whenever you get the urge to splurge on a penny stock, what you're really contemplating, in many cases. is buying shares in Caveat Emptor Inc. "It's a caveat emptor market where the buyer really does have to beware," says B.C. Securities Commission executive director Stephen Wilson. The provincial regulator is concerned that increasing numbers of individual investors are investing in penny stocks on so-called Over the Counter (OTC) markets without understanding the added risks they're buying. In fact, several weeks ago the BCSC issued a major bulletin warning B.C. investors about the risks associated with trading on the U.S.-based Nasdaq bulletin board which, like all OTC markets, has limited regulation. The warning stems from recent news of the FBI alleging that organized crime has become involved in this market. Penny stocks, also known as micro-caps, always have been much higher risk than small or large-cap stocks. But when they trade on an OTC bulletin board -- also known as the "unlisted" or "street" or "curb" market -- with little or no regulation, they become even more of a risk. Even the term "penny stock" is a misnomer because now it refers to any stock trading up to $5. It also can refer to any low-priced stock which a brokerage refuses to sell to an investor on margin. But a $3 stock trading on the Toronto Stock Exchange or the Canadian Venture Exchange is an animal very different from one trading on an OTC market. Technically, both are penny stocks because of their price but, unlike those trading on conventional exchanges, the stocks trading on the OTC market do not come under the extensive regulatory scrutiny intended to protect investors. That's because an OTC market basically is a network of brokers linked to one another via their computers. In other words, where investing on a conventional exchange compares with shopping at a department store, the OTC market is more like a garage sale. "The OTC market does not have the controls and safeguards with respect to information available to investors or the authenticity of that information," says Wilson. "These are normal things you take for granted when trading on a fully-regulated exchange." However, regulation only protects investors from being treated unfairly or being conned or scammed by unscrupulous promoters. It is in no way intended to protect investors from losing money on a legitimate investment. We also have an OTC market in Canada. It's called the Canadian Dealer Network (CDN) and Wilson says that, while it's not quite as bad as the Nasdaq bulletin board, it has less regulation than conventional exchanges. "Fortunately, there are plans in the works to roll the CDN under the CDNX's umbrella, but I have to say in all honesty that each time you bring an OTC exchange under regulation, another OTC market springs up," he warns. Most penny stocks are from small companies, either in the mining business attempting to raise funds for exploration or in technology companies looking for financing for product development. However, a legitimate penny stock will have some sound business fundamentals behind it such as cash flow, assets, a business plan and prospectus, and so on, even though the venture holds investor risk and increased price volatility. The kind of penny stock you should avoid is the one that's being promoted using false or incomplete information. This kind of information often is floated on Internet chat rooms by the promoter or others attempting to "push" the stock. Many of these stocks are promoted by boiler-room operations where promoters use high-pressure selling techniques to solicit investors over the telephone, Wilson says. In fact, this year Hollywood released a movie called Boiler Room, starring Giovanni Ribisi, which Wilson says gives an excellent insight into how these stock scams work. "Penny stock promotions often revolve around stories being told about them and hype rather than actual value of the business," says Rick Sales, an equity analyst with Vancouver-based Odlum Brown Limited. "They're all about pizzazz." Sales advises investors to steer clear of penny stocks for a portfolio being used to save for retirement. "I don't think they belong in a serious portfolio. "If you want to play with penny stocks you'd be better doing it in a separate side-portfolio." But Sales and other analysts also point out that, once in a while, a penny stock comes out of nowhere and pays off investors with major profits. "Penny stocks are not all bad news," Wilson says. "This market does serve a purpose of providing seed capital for start-up companies that otherwise would have extreme difficulty in raising money."