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OHIO DIVISION OF SECURITIES WARNS INVESTORS OF 'CYBERFRAUD' ON COMPUTER BULLETIN BOARDS

Scam 'Potholes' on Information Superhighway Already Threaten 192,000 in
 Ohio; Investor Bulletin from Division of Securities Outlines Self-
 Defense Tips for Online Investors
 COLUMBUS, Ohio, June 30 /PRNewswire/ -- Investment fraud and abuse has made the leap to "cyberspace," the fast-growing world of commercial computer bulletin board services (such as Prodigy, CompuServe and America Online) and the informal web of computer networks that make up the Internet, warned Donna Owens, Director of the Ohio Department of Commerce. Already at risk: an estimated 192,000 Ohio residents who subscribe to commercial online services, where a variety of illegal and abusive investment schemes, including stock manipulation, pyramid schemes and Ponzi scams, are now flourishing.
 Ohio Securities Commissioner Mark V. Holderman joined the North American Securities Administrators Association (NASAA) and other state securities regulators around the United States today in issuing an urgent warning to the public about the growing danger posed by investment scams and schemes in cyberspace. "Unwary Ohio residents who take this wrong turn on the information superhighway will end up getting cleaned out by high-tech schemers," warns Holderman. "It is vitally important that the many potential victims here become aware of this new problem, arm themselves with self-defense tactics and know that they can turn to this office for help if they need it."
 Commissioner Holderman issued a special Investor Bulletin outlining the major investment fraud "potholes" on the information superhighway and the steps that small investors can take to protect themselves. The Bulletin is available at no cost from the Ohio Department of Commerce's Division of Securities to those who call 614-466-3316 or write to: Ohio Division of Securities, 77 S. High St., 22nd Floor, Columbus, OH 43266-0548.
 SCOPE OF THE CYBERFRAUD PROBLEM
 Nationwide, four million consumers who have home computers equipped with modems subscribe to the leading commercial online bulletin board services, including Prodigy, CompuServe and America Online. These commercial services allow subscribers to post messages in electronic bulletin boards devoted to specific interest areas, such as investments.
 Holderman said: "This emerging problem area in investment fraud and abuse just proves that those who are intent on fleecing unsuspecting investors will use any means at their disposal to do so. Today, we are putting the growing number of online investors in Ohio on notice that they need to proceed with extreme caution. The danger here is that cyberspace, which could be a beneficial way for consumers to do a better job of informing themselves, will instead be discredited as a haven for fast-buck artists."
 The Investor Bulletin issued today by the Division of Securities details the major types of investment fraud and abuse schemes flourishing today in cyberspace. In particular, Holderman cautioned investors in Ohio to be wary of thinly-traded and little known stocks that are hyped as having huge potential to rise in price. Other major problems include unregistered investment schemes (including pyramid scams and "exotic" securities, such as wireless cable "partnerships," viatical settlement schemes, and ostrich farming) where the investment may be entirely or largely nonexistent.
 While some commercial computer bulletin board services attempt to control the messages posted on investment topics, others impose few or no restrictions on such communications, which are then available for viewing by millions of investors around the nation. According to the Bulletin, one concern has to do with investors who directly access the Internet, an informal super-network connection of computer services in which there is virtually no screening of any sort of messages and other information distributed worldwide. Other consumers dial directly into local and national bulletin boards that are devoted to specific topics, including investments.
 HOW INVESTORS CAN PROTECT THEMSELVES FROM CYBERFRAUD
 Privacy and freedom from undue government regulation are major priorities of many of those who travel through cyberspace. Savvy con artists and other sharp operators now appear to be exploiting these laissez faire attitudes. Holderman warned: "The reality is that there will never be enough 'cybercops' to check out every investment scheme or claim made on the information superhighway. Therefore, it is vitally important that investors in Ohio arm themselves with the facts and tips about how to avoid being victimized in cyberspace."
 The Investor Bulletin sets out in detail a number of key pieces of advice for investors who use commercial bulletin board services and the Internet, including the following highlights:
 -- Don't expect to get rich quick in cyberspace.
 -- Don't assume that your online computer service polices its investment bulletin boards.
 -- Don't buy thinly-traded, little-known stocks strictly on the basis of online hype. These are the stocks that are most susceptible to manipulation; unlike blue chips, low-volume stocks can be moved through relatively small strategic trades. Always take the time to do your own research using reputable print and database resources.
 -- Don't act on the advice of a person who hides his or her identity. Many computer bulletin board services allow people to use aliases and nicknames. As a result, you may end up dealing with an undisclosed broker, investor or company insider who has an interest in driving up the price of a stock through false information or baseless speculation that is difficult or impossible to disprove.
 -- Don't get suckered by claims made about "inside information," including impending news releases, pending contract announcements and new products.
 -- Don't assume that just because someone says that they have checked something out that they have done so. Online stock hypesters make all sorts of claims about visiting companies, inspecting mining operations and having personal conversations with company officials. Keep in mind that you may not be able to verify who is making these claims...much less whether any of the information is true or the supposed research ever took place.
 -- Don't forget to always be on the look-out for conflicts of interest. A growing number of those who analyze stocks online are receiving cash or stocks in exchange for making glowing comments about the companies in question. Some of these individuals prominently disclose this fact, while others make little or no mention of the fact that they are paid touts.
 -- Don't forget to make sure first that an investment opportunity and the person promoting it are properly registered with the Ohio Division of Securities. A failure by an issuer or broker to follow the state requirements here is often a major "red flag" of an investment scam.
 -- Don't post your name, address or phone number online. Given that this information will become available to millions of people in the United States alone, the first reason to avoid doing so is to avoid possible harassment. The second reason is that you are opening yourself up to being put on a "sucker list" that could be used by con artists for e-mail, regular mail, or boiler-room telemarketing purposes. Protect your privacy online!
 "The most important thing for investors to remember is that if it sounds too good to be true, it probably is," Director Owens said. "And if you have been victimized or think that you have spotted a scam, let us know by contacting the Division of Securities at 614-644-7381."
 -0- 6/30/94
 /NOTE TO EDITORS: For TV stations, a related video news release (VNR) will be available on June 30th at 1:30-1:45 p.m. ET, Telstar 302, transponder 1H, audio 6.2/6.8/
 /CONTACT: Mark Holderman, Ohio Securities Commissioner, 614-466-3316/


CO: Ohio Department of Commerce; Ohio Division of Securities ST: Ohio IN: CPR FIN SU:

TO -- DE007 -- 1650 06/30/94 10:02 EDT
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Date:Jun 30, 1994
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