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Microcap & Penny Stocks : Rocky Mountain Int'l (OTC:RMIL former OTC:OVIS) -- Ignore unavailable to you. Want to Upgrade?

To: Just My Opinion who wrote (46135)	4/25/1998 5:37:00 AM
From: Ditchdigger	Read Replies (2) \| Respond to of 55532

Dow Jones Newswires -- April 20, 1998 No Mkt-Makers Makes Some Stks Orphans Of The Bulletin Board By JOHANNA BENNETT Dow Jones Newswires NEW YORK -- When "Toochman2" tried last week to unload 250 shares of Shopping.com (IBUY), he met with problems. His Internet message board posting to fellow investors belied his frustration at not being able to sell all of his shares at his asking price of 19 3/4, which he claimed was well within the day's spread of 16 to 22. "Only 50 shares sold in three hours," "Toochman" said. "Buying IBUY was never a problem... Selling is what is the tough part," he added. Almost two weeks have passed since the Securities and Exchange Commission lifted the temporary suspension placed on Shopping.com shares last month following allegations of stock manipulation. But while the Internet retailer's stock has resumed trading on the OTC Bulletin Board, an electronic pricing system run by Nasdaq, not a single brokerage firm operates as a market-maker. It is a situation, according to some securities lawyers and other experts, that can create difficulties for investors looking to buy and sell shares of orphaned bulletin board stocks. Market-makers traditionally work to provide liquidity, ensuring a continuous market for a particular stock by agreeing to buy or sell shares at a posted price. And although the absence of a market-maker doesn't prevent a stock from trading, some experts say that without the firms' presence, prices and spreads sometimes can fluctuate wildly. For bottom-fishers, that can mean a chance to pick up investment bargains, depending on how trading plays out on any particular day. But other investors dealing in the stock can find themselves paying too much, selling for too little or unable to find any takers, said Samuel L. Hayes, professor of finance at Harvard Business School. "You put the stock out there, and you either ask for a bid or you indicate the lowest price you are willing to accept and see what happens," Hayes said. "Someone could come in with a ridiculous offer. But if you have no place to go and you need the money, you can get screwed royally." Unlike the New York Stock Exchange, the OTC Bulletin Board doesn't operate on an auctionlike system. Investors trading stocks on the electronic pricing system use brokers to post messages on the bulletin board's computer system expressing an interest in buying or selling a particular stock at a certain price. If an investor's request fails to attract a response, then the stock's market-maker remains on hand to buy or sell shares at a posted price. "Market-makers stand ready to provide liquidity. If I come into the marketplace with 1,000 shares, someone stands ready to buy that stock and publish a quote," Professor Hayes said. Experts agree that the absence of market-makers doesn't always hamper a stock's market activity. "There are ways to get quotes for stocks that don't have market-makers," said Jeff Brown, a Chicago-based securities lawyer. "You can even trade in them. It is just a little harder." Stock quotes, or at least spreads, are available from wholesalers, as well as screen-based trading systems like Reuters Instinet, said Cery Perle, president of Waldron & Co., which took Shopping.com public in November and has been a market-maker for the stock. Waldron has been the target of allegations by short sellers, led by Fiero Bros. of New York, that the brokerage firm targeted Shopping.com shares for a "short squeeze," a price increase created by artificial scarcity in the stock. The SEC and the National Association of Securities Dealers are investigating allegations of stock manipulation in the trading of Shopping.com. Both the company and Waldron have denied any wrongdoing. Meanwhile, the NASD is considering an application from Waldron to resume market-making for the stock. "You can still buy the stock," Perle said. "They may quote you a wider spread. They can do that. But they will quote you. Typically, what you should do is get three quotes." But without market-makers and the published quotes they provide, experts said, the market for a stock can be volatile, and they question how investors can be sure they are trading at a fair price. But according to some sources, when it comes to the market, guarantees are rare. Bulletin board stocks are by nature considered riskier investments than those found on the major exchanges. And even with market-makers, there are no assurances that investors will be able to buy or sell any type of stock at the time they want and at the price they want, said Brown. "They (investors) are not necessarily getting screwed... That is just the market," Brown said. Shopping.com has been an orphan since it resumed trading April 6 Federal securities law requires that before a brokerage firm can resume making a market in a bulletin board stock released from SEC suspension, the firm must prove to regulators that it has received and reviewed adequate information about the security. -Johanna Bennett; 201-938-5670