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Technology Stocks : COMS & the Ghost of USRX w/ other STUFF -- Ignore unavailable to you. Want to Upgrade?

To: Scrapps who wrote (18582)	4/8/1999 4:37:00 PM
From: Moonray	Respond to of 22053

Investors buy bogus Internet tip USA TODAY - 04/08/99- Updated 12:35 AM ET NEW YORK - Stock traders learned the perils of hot Internet tips Wednesday when a bogus news article created a frenzy over PairGain Technologies and sparked an inquiry. Shares of PairGain, a telephone equipment maker based in Tustin, Calif., jumped 31% in reaction to a report posted in the Yahoo financial chat rooms that claimed Israel's ECI Telecom was acquiring PairGain. By the time the report was discredited, millions of shares had changed hands and the Securities and Exchange Commission agreed to look into the matter. "This is just another example of the many shades of fraud that are being perpetrated on the Internet," says Ron Wood, assistant enforcement chief in the SEC's Los Angeles office. The report underscores not only the prevalence of false tips spread over the Internet but the relative ease with which scam artists can dupe investors trying to make a fast dollar. It looked real, replicating a Bloomberg News Web site article. It even included quotes from executives discussing a $1.35 billion acquisition. Securities regulators have cracked down on electronic fraud. The SEC's Los Angeles office, for example, recently halted trading for 10 days in six stocks after the startup firms put out releases touting bold new ventures but with few details. The stocks shot up after the releases hit the Internet. Federal officials were alerted to Wednesday's phony report by chat room participants, news organizations and PairGain. "It was a perfectly timed scam," says Anthony Elgindy, president of Pacific Equity Investigations, which monitors stock hyping on the Internet. "There was a Jewish holiday in Israel and PairGain wasn't open for business yet." Federal prosecutors say that depending on investor losses, a person charged with fabricating company news could face five to 30 years in prison and fines of up to $1 million. Trading in PairGain remained brisk even after the report was denied. The stock closed up 7/8 at $9 3/8, down from a high of $11 1/8, on volume of 13.7 million shares. o~~~ O