Stock market moshenichestva

Advising clients on issues of e-business securities often hear questions about possible fraud, and options for development of type AB "MMM" (not to be confused with the American corporation "MMM", included in the calculation of the Dow-Jones). In response to very pertinent questions of this kind can give a couple of eloquent American business press.

28 October 1998 the Commission on the Securities and Exchange Commission (SEC) a strong admiration of American (and not only) of investors that brought 23 separate cases against 44 defendants (such as physicists, and Yuriko) on charges of securities fraud over the Internet .

This action appears to be the most significant and appropriate since the SEC has undertaken to determine the policies of cyberspace in 1995. "As the Agency," said John Stark, head of SEC to monitor the Internet (internet enforcement unit), - we are clearly following the "well-defined and formalizuemomu approach to the definition of Internet fraud. We specifically track the letter online, and people imposing-ing the purchase of shares, particularly small-capitalization stocks and those that are inactive are traded, as well as ads on bulletin boards and so-called investment websites.
"Police in the" must make the Internet a safe place where people can invest their money and consult on these issues - said Laurence Greenberg, General Counsel Motley Fool (www.motleyfool.com). --
Internet suffered from a lack of relevant laws of the Wild West environment that allows people to do this kind of things (fraud - prim.avt.) Too easily. "

Division of SEC, created in July, testing an average of 120 complaints of users a day. Richard Walker, Director of SEC Observer stated that the defendants had forced 235 shares of small capitalization companies. "They not only lied about his personal lack of interest, but also for those companies that they covered, and then receive income from any slight fluctuation prices, quickly selling their shares."

Pending cases been based on methods and mechanisms, with the majority of which the consumer was familiar even before the emergence of Web:
1) dust-mail (Spamming).
Some of the defendants send a large number of emails with the recommendations of the purchase of shares, forgetting to mention that the company paid for recommending the imposition of their shares.
2) Demand Pumping (Pumping and Dumping). Maskiruyas independent experts, some of the defendants, the action recommended on public bulletin boards, such as a high rating and a legitimate site Silicon Investor, to increase demand and then sell the paper, which will raise the price of trusting investors.
3) imposition (Touting).
Some of the SEC defendants worked for the company for a fee, in recommending its shares, but no mention of this relationship in its brochure.
4) Skalpirovanie (Scalping).
Skalpery buy shares, and then encouraged them through letters and investment sites, not to mention that the master data papers. After growth of quotations, they sold the paper. These and many other acts do not take advantage of and shun Future Superstock (www.futuresuperstock.com), which has more than 100 thousand subscribers. SEC believes that the FSS and its director Jeffrey Brass recommended 25 small stock. In doing so, he was unable to clearly explain the origin of 1.6 million dollars (in the form of cash and shares) from the recommended companies.

"Brass has gone too far, - said Tom Melton, SEC trial attorney in the FSS, he also sold the paper, which imposed, he lied about his independence, and lied about the market behavior of the recommended securities to them. He is the stereotypical way in the fight against fraud SEC on the Internet. " Melton led Keystone Energy Services (OTC ISSUE: KESE), as one of the examples of Brass. Brass, approves SEC, in October 1997 she received the money from the Keystone that the position of its shares as "Stock Pick of the Month" (Shares month at FSS). At that time, they traded at a price of $ 5. When he overlook the behavior of the shares in June 1998, he ignored the fact that the shares traded at a price less than the dollar, noting only that they had reached a height of 12 875 $. "And it was the intraday high, closing price and the maximum was 9 $," - added Melton.

SEC identifies two concurrent causes of the spread of Internet securities fraud: the increase in "bovine" market, which has led legions of new and inexperienced investors, as well as accelerated growth of the Internet as a source of information. However, there is nothing new, the majority of SEC charges are based on paragraph 17 of the Law on securities (Section 17 (b) of the Securities Act of 1933). New is the only place where fraudsters play to their game. Indeed, the proliferation of investment sites, news letters (online newsletters), and discussion forums transformed the way in which many people gather information for the investment. On the one hand, the legitimate news and information sites provide small investors with quick access to detailed and expert information, which had previously been the prerogative of large brokerage houses and customers. The Motley Fool and Silicon Investor (www.siliconinvestor.com), for example, have become the main resource of information for the investment of many people, allowing the gain to the success of companies such as Netscape (NASDAQ:
NSCP), America Online (NYSE: AOL) and Amazon.com (NASDAQ: AMZN).

Fraudsters use this investment hunger, prikidyvayas ordinary investors in the discussion groups or maskiruyas independent experts with their own web sites. Most of the identified SEC fraud connected with the shares of small companies traded on the so-called bulletin boards market OTC (OTC Bulletin Board (OTCBB)), system quotes the National Association of Securities Dealers for the shares, not listed the three major U.S. stock exchanges. OTCBB includes shares of about 7 000 small corporations.

Although SEC is stepping up efforts to monitor the Web, some action detectives had examined "the dark alleys and publish warnings about dubious advice and suspicious websites. One such alert websites - The Stock Detective (www.stockdetective. Com), has already indicated to the SEC 12 companies in its Schedule of the bad guys "The List".

All this should convince investors that there are forces that monitor compliance with the rules, but in such an important and delicate case, as a financial investment, it is necessary, first of all be guided by common sense.

From the magazine "Money"