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Technology Stocks : Advanced Engine Technologies (AENG) -- Ignore unavailable to you. Want to Upgrade?

To: 246810 who wrote (1364)	7/13/1998 9:09:00 AM
From: Arthur Radley	Read Replies (1) \| Respond to of 3383

The following are excerpts from an article in today's Houston Chronicle....OTC BULLETIN BOARD HAS IMAGE WOES "The OTC Bulletin Board is home to hundreds of such chameleons. Company histories get rewritten daily. Futures often are vague at best. It's virtually unregulated market, fraught with everything from heavy losses to investment fraud. THERE's also the OCCASIONAL financial jackpot. To some, the BB is pure capitalism--a place where companies with barely a hint of a financial plan persuade investors to take a chance. To others, the system is a breeding ground for fraud--an invitation for hucksters to take advantage of NAIVE investors hoping for the big hit. The BB is a loosely regulated service that posts real-time stock quotes, last sale prices and volume information. All it takes for a stock to trade on the BB is a sponsoring brokerage firm, WHICH GENERALLY THEN CONTROLS THE MARKET FOR THAT STOCK. As the BB has grown, so have the small-stock scams. THE SEC believes that investors were bilked out of $6 BILLIOM last year in small-stock fraud. The most common BB stock scam is a so-called "pump and dump" scheme. First, those who would defraud accumulate a large block of a company's stock, then start hyping it through misleading news releases and bogus posting on INTERNET BULLETIN BOARDS. That's the pump. Investors get suckered into buying the stock, either believing the hype or jumping in to catch a ride on the stock's momentum. As the shares soar, the perpetrators of the fraud sell(WHERE HAVE WE SEEN THIS). That's the dump. SEC Chairman Arthur Levitt told a securities trade group in April that the agency would have "zero tolerance" for brokers who abuse BB stocks. "These rogue firms are professional only in the sense they have mastered the art of hucksterism, of preying on investors' lack of sophistication," Levitt said. "When one of their brokers picks up a phone, it's almost as dangerous as when a drunk gets behind a wheel.'