Worse than ever. (Wall Street West).For nine years, Harms Tajyar worked at the Financial Relations Board, a Century City investor relations Investor relations The process by which the corporation communicates with its investors. shop. IR shops try to sell a stock by citing a company's virtues to investors, brokers and reporters. But in March, Tajyar switched sides and hung up his own money management shingle, Investor Relations International Inc. in Sherman Oaks. But this time he's shorting stocks. Why the switch? Despite recent regulatory reforms, Wall Street is woollier than ever, answers Tajyar, especially for microcap and penny stocks Inexpensive issues of stock, typically selling at less than $1 a share, in companies that often are newly formed or involved in highly speculative ventures. Penny stocks are usually available for sale over-the-counter, that is, among brokers and customers themselves, as . "Back 10 years ago, it cost $600,000, or $700,000 to boost a penny stock Penny Stock A stock that sells for less than $1 a share but may also rise to as much as $10/share as a result of heavy promotion. All penny stocks are traded OTC or on the pink sheets. Notes: Penny stocks are highly speculative and risky. ," he said. Mass mailings and "boiler rooms" meant postage costs and labor to pay. Today, "10 million e-mails can be sent out overnight," and many dubious Web sites tout stocks. The business of stock promoting got a lot cheaper. Yet class-action lawyers are not interested. The stakes are too trivial for lawyers working on contingency, while the SEC, though sporadically interested, has bigger fish to fry. The U.S. Attorney's Office, which has the authority to put stock crooks behind bars (the SEC can bring only civil cases), rarely goes after tiny companies, Tajyar said. The result? "There are more obvious frauds out there than ever," Tajyar said. He cited a recent case of a company claiming to have an FDA-approved treatment for varicose veins Varicose Veins Definition Varicose veins are dilated, tortuous, elongated superficial veins that are usually seen in the legs. Description . Calls to the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. revealed not only had the agency not approved the process, but that the feds had instructed the company to stop advertising as much, Tajyar said. "You have to do your due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. , but some of these companies are just obvious frauds," he said. "You just have to be patient. They will crumble sooner or later." |
|
||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion