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To: francis terry who wrote (3904)	5/26/1999 11:43:00 AM
From: Jeffrey S. Mitchell	Read Replies (2) \| Respond to of 4128

Great article on how boiler rooms pump stocks... does any of this sound familiar? Susan Antilla Wed, 26 May 1999, 11:17am EDT Tacky Tactics for Selling Penny Stocks: Susan Antilla By Susan Antilla <snip> Pollicino also wrote that the firm encouraged brokers to woo investors initially to buy a big-name stock listed on a major exchange before moving them into the firm's house stocks. While boiler room operations frequently use the ''well-known-stock- first'' tactic in order to first make investors feel comfortable, Pollicino explained that Pacific Cortez did it for another reason: investors with no liquid securities in their account might back out of a penny stock tout that went bad, but would be stuck with the trade if the broker had a big, liquid stock it could sell in order to cover a dicey penny-stock purchase. <snip> In an arbitration complaint that he and his wife filed against Pollicino and LaJolla last year, investor Hillman said Pollicino promised that Sterling would double in two weeks. Instead, Hillman lost on Sterling. Investor Newton said in his complaint filed with the National Association of Securities Dealers that Pollicino made claims of having had one-on-one conversations with the management of Sterling. Pollicino and one of his colleagues said that big mutual funds were loading up on the stock, according to the complaint, which described promises of ''$5.00 to $7.00 a share profit and send your money back in five or six weeks, easily before sixty days.'' Poor Disclosure While Pollicino and co-workers had lots of misinformation to convey, they managed to sidestep more truthful disclosure that surely would have caused their customers to pause. (California and investor Newton have dropped Pollicino from their complaints; Pollicino says that has nothing to do with his providing information about the misdeeds of Pacific Cortez). Sterling, for one thing, had a president whose husband, Leslie Greyling, was a consultant to the company despite an eyebrow-raising regulatory record. According to regulatory filings by Sterling, Greyling entered into a consent decree with the SEC over charges of securities fraud in 1991; pleaded guilty to a charge of false statements on a visa application in 1996; and pleaded guilty in connection with a plea agreement to securities fraud in a Florida U.S. District Court in 1997. In connection with the last, Greyling was deported from the U.S. and told he could not re-enter the country ''without the permission of the Attorney General.'' Boxing Match <snip> A telephone operator said there were two listings in Boca Raton, Florida, for Richard Gladstone but that they were not published in the directory. There is no phone listing for Gladstone's former firm, Morgan Gladstone & Co. <snip> Indeed, the best advice of all for investors may come from Boyar, Sterling's legal counsel, who must have a place in this story considering he pleaded guilty to a misdemeanor charge back in 1997, when he was a co-defendant in the securities fraud case against Greyling. Boyar points out that Sterling followed securities law and disclosed all the ugly stuff about its consultants, allowing investors every opportunity to opt out of buying Sterling shares ''Anyone with a computer anywhere in the world can pull up'' SEC filings, he added. ''If investors get a phone call from a broker and don't do independent checking, they do so at their own peril.'' ===== Full story at: quote.bloomberg.com