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.

Microcap & Penny Stocks : SEXI: Mostly Fact, A Little Fiction, Not Vicious Attacks -- Ignore unavailable to you. Want to Upgrade?

To: Findit who wrote (12646)	5/7/1998 5:11:00 PM
From: Urlman	Respond to of 13351

SEXI A.K.A. SOE A.K.A. SEI MEETS PETER JENNINGS WORLD NEWS TONIGHT WITH PETER JENNINGS (6:30 pm ET) MARCH 30, 1998 Transcript # 98033006-j04 A CLOSER LOOK JOHN MARTIN, PETER JENNINGS HIGHLIGHT: PENNY STOCKS - BEWARE OF RIP-OFFS AÿAÿAÿ THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. Aÿ PETER JENNINGS: Well, in spite of all the warnings about investing for the long term, some people are still looking for the quick fix. And for those people, there have always been penny stocks -- just what their name implies. Dirt cheap to begin with, even the smallest fluctuation in price can make you a fortune, unless, per chance, you are ripped off. Here is ABC's John Martin. Aÿ JOHN MARTIN, ABC News: (voice-over) Like many investors, Deena and Eric Esnard (ph) of Houston followed news about their penny stocks on the Internet. What they didn't know is that when it comes to small companies, the kind whose stocks sell for as little as a nickel a share, this screen can be a magnet for fraud in a virtually unregulated market. Aÿ DEENA ESNARD, Investor: We have a few small investments, but SEXI was our big investment. Aÿ JOHN MARTIN: (voice-over) SEXI stands for Systems of Excellence Incorporated. Aÿ ERIC ESNARD, Investor: I put a quarter million of my dollars in there. That's gone now. It's gone. Aÿ JOHN MARTIN: (voice-over) SEXI claimed it sold video teleconferencing equipment -- this was a demonstration -- to the State Department, to the Pentagon and to Johns Hopkins University. None of that was true, say federal investigators. They estimate investors lost up to $100 million. Aÿ (on camera) So how did SEXI manage to fool so many people? Bribery. It bribed traders to bid up the price. It bribed accountants to falsify records. It bribed stock analysts to publicize the company on the Internet. So far, at least five people have pled guilty to fraud. Aÿ (voice-over) In Miami, Thomas Clines (ph), SEXI's newest president, told us he had nothing to do with fraud. Aÿ THOMAS CLINES, President, SEXI: If there's anyone I'd like to protect in this thing, it would be the shareholders in this company. Aÿ JOHN MARTIN: (voice-over) So who is protecting the public? The National Association of Securities Dealers is supposed to watch penny stocks for the government. It declined repeated requests to show us its monitoring operation or to be interviewed. Aÿ The Securities and Exchange Commission recently adopted new rules to fight penny-stock fraud, but when it comes to enforcing them, it may not have the resources. Aÿ WILLIAM MCLUCAS, SEC Enforcement: I am concerned that we are stretched a little thin. Aÿ JOHN MARTIN: (on camera) What's the lesson of this? Aÿ DEENA ESNARD: Caveat emptor. Let the buyer beware. Aÿ JOHN MARTIN: (voice-over) Regulators say stocks like SEXI are launched every day. Penny stock fraud has tripled in the last decade to $6 billion. John Martin, ABC News. Aÿ PETER JENNINGS: Good rule for the day, buyer beware. We'll be back in a moment with more news. Aÿ (Commercial Break)