Interesting that some people think I am part of an 'organized ring of cybervigilantes'. I've been called a child molester, a paid employee of some Canadian hedge fund, a Jew (I'm not kidding! ...makes me wish I were!) and all sorts of other stuff. The bad boys just cannot believe that I do this for fun. I like to have fun, and part of it is exposing criminals. I don't short the stocks, and I don't work "with" anyone, other than what everyone sees on SI. Anybody who wants to see where I am at can see it all here, #reply-7433078 it's not a secret that I hate BB scams and I hate the people that use them to rip the public off. As far as this particular deal goes (CTRN, etc.) I didn't do diddly except make a few jokes and keep Flod, Bear, and the rest of the people that were working happy. I probably got mentioned just because of my most excellent alias! Pluvia should get the credit, and if anyone is pissed that he shorted the stock, then tough. He shorted it on his own DD, and he did it totally legally. The guys you should be pissed at are the skuzzballs that own the company and throw worthless paper out to you in exchange for your hard earned money. Anybody that buys BB stock gets what they deserve. Sorry, but it's true.
Here is the entire article.
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A Cybersleuth Claims Credit for SEC Action
on Bulletin-Board Stocks
By Eric Moskowitz
Senior Writer
2/5/99 3:00 PM ET
With the explosive growth of online trading, a nether world is evolving in
which individual investors, cybervigilantes and Internet gurus meet in
online stock chat rooms. Like bit players in a John Ford movie, these
colorful characters populate the Wild West of Wall Street.
With individual investors taking an increasingly
prominent role in this bull market, these online
main streets -- full of gossip, opinion, invective,
hype and sometimes hard news -- can exert hefty
pressure on stocks. And taking center stage are
the Silicon Investor chat boards.
The cybersleuths here, often dismissed as kooks
or crooks, recently received some vindication
from regulators. Last Friday, the Securities and
Exchange Commission suspended trading for 10 days on six
over-the-counter bulletin board stocks after they suddenly rocketed
even without any material news. The impetus to halt trading came from
Steve Pluvia (not his real last name), a well-known poster on Silicon
Investor who has seen his fair share of controversy. On Jan. 25, a full
week before the SEC halted trading in four of the stocks, Pluvia started
a thread titled "One Big Scam? CTRN, ECTS, IVHD, SMEK and
MALB." The stocks subsequently halted by the SEC included Citron
(CTRN:OTC BB), Smartek (SMEK:OTC BB), Electronic Transfer
Associates (ECTS:OTC BB) and Invest Holdings Group
(IVHD:OTC BB).
Pluvia and his cyberassociates, who use Web names such as Bear
Down, Floydie and Tastes Like Chicken, represent a new breed of
sleuth/investor in search of instant gratification. Perhaps this breed
owes its existence to the rampant bull market and evolving computer
technology. Ever since Silicon Investor -- now owned by Go2Net
(GNET:Nasdaq) -- started more than three years ago, Pluvia has used
the chat boards to communicate his findings as he tracks small-cap
companies that fall beneath Wall Street's radar.
"I spent a good 15 hours researching the companies two days before I
started the thread and discovered all these companies were related to
each other," says Pluvia, a self-described private money manager who
works from his Las Vegas home with a Level II Nasdaq trading station
by his side. Pluvia says he sent his research to the National
Association of Securities Dealers and the SEC. "I feel comfortable
that these stocks were halted because of the information we brought
public." (The SEC and NASD are keeping mum about what prompted
the trading halts.)
What tipped him off? The companies' press releases shared a
common contact person, Pluvia says. "When I called the number,
someone would answer Citron, and then when I called later, they would
say hello, Smartek," he explains. "That's when I knew something wasn't
right."
Smartek, an Idaho-incorporated company that says it is involved in
wholesale menswear and federally subsidized housing, felt the impact.
The penny stock jumped last month to over 7 from 2. After Pluvia's
report hit the Internet, it reverted. When trading was halted four days
after the report, Smartek was at 1/4.
Bill Hazelton, who answered the telephone in Smartek's New York
offices, said he hadn't heard of the chat-board discussions. Hazelton
declined to identify his role at Smartek but added that the company
would provide the information the SEC requested. "We plan on our
stock resuming trading," he said.
"Pluvia does his homework, goes to the conferences and knows more
about technology than most Wall Street analysts," says a West Coast-based hedge
fund manager who doesn't invest in penny stocks.
But while some money managers respect Pluvia's diligence, they
prefer not to be associated with him.
'Wall Street has short memories,' says Tony
Elgindy.
"They are 100% responsible for uncovering the scams," Tony Elgindy,
director of research and trading at Pacific Equity Investigations,
says of Pluvia. Elgindy himself claims credit for uncovering the
activities of another stock halted by the SEC last Friday, USA
Talks.com, an outfit headed by Allen Portnoy, the former CEO of
Digitech, a voice-recognition software company delisted from the
Nasdaq in 1989 for failing to meet equity requirements. "Wall Street,"
laments Elgindy, "has short memories."
But cybersleuths never forget. "I remember when I wrote about Premier
Laser Systems (PLSIA:Nasdaq), I started getting death threats,"
recalls Pluvia. "When people lose money, they sometimes do crazy
things." Pluvia raised questions about Premier Laser on Silicon
Investor in August 1997, when the stock was hovering around 10. This
week, Premier was trading just above 3.
Although Pluvia says he never had a short position in that stock, he and
his clients, after locating a suspicious company, more often than not go
short and air their findings on Silicon Investor. Pluvia, who claims to be
in his mid-30s, says he shorted 2,000 Citron shares when the stock
was trading at 12 in mid-January. When Citron rose to 42, Pluvia
started the "One Big Scam" thread. The stock retreated to 27, which is
when Pluvia shorted the stock again. By the time the SEC halted
trading, Citron was hovering around 19 7/8.
The online sleuth says never graduated from college but has worked as
a broker. "I only have three clients and you need to manage a certain
amount of money to register with" the SEC, he says. Three clients?
"Actually, it's just me and few others pooling our money together," he
concedes. Investment advisers need to register with the SEC only if
they manage more than $25 million in assets.
"When I would ask these companies legitimate questions -- like Can
we see some financials? -- they would say no. Eventually they would
just hang up on us. Aren't these all public companies?" Obtaining
financial data on companies that are listed on the over-the-counter
bulletin board is tough, since there is little oversight. The SEC actually
approved a Nasdaq request earlier this year to make all 7,000 bulletin
board stocks file with a regulatory agency, says Nasdaq's Shokouhi.
About half of these companies regularly file already, he adds, and the
rest will need to do so by July 2000.
Not everyone is enamoured of Pulvia and his tactics. In fact, one
executive accuses Pulvia and his comrades of working for a collection
of hedge-fund or money managers looking to make a killing by shorting
these underfollowed stocks. "I believe they are organized in some
way," says John Reed, president of Dallas-based interactive
advertising company Source Media (SRCM:Nasdaq). Reed watched
in horror as its stock fell to 4 from 39 last summer after Pluvia and
friends wrote about the company. (TSC covered Source Media's
eventful summer.)
Pluvia admits working with some "money-manager types" in order to
uncover that scam quickly. "You don't want online traders to step on a
landmine," he says. But he stands by his contention the company's
main interactive product's trial run was "a bust." Although he
acknowledges having a short position in Source Media and Citron
(less than 1% of his portfolio, he says), he maintains he didn't have a
position in the other four stocks in the Scam thread. "I even posted a
disclaimer on the [Jan. 25] Scam thread not to go long or short the
stocks listed because insiders were making them extremely volatile,"
says Pluvia.
Now in the chat rooms, plenty are ready to claim success. Tod Pauly,
another self-described cybervigilante, says that since the SEC's
action, there has been a flurry of chest-beating on the message
boards. "Suddenly everyone is an expert in finding scam stocks," Pauly
says. |
