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STOCKHOUSE MEDIA CORPORATION
Mar 30, 2001 10:20 ET
StockHouse Issues Advice To Private Investors As The Ontario Securities Commission Warns Of Online Scams
NEWS RELEASE TRANSMITTED BY CCN NEWSWIRE - A SERVICE OF ITG
FOR: STOCKHOUSE MEDIA CORPORATION
MARCH 30, 2001 - 10:20 EST
StockHouse Issues Advice To Private Investors As The
Ontario Securities Commission Warns Of Online Scams
TORONTO, ONTARIO--
9 Red Flags Help Investors Spot Message Board Scams
On the heels of an Ontario Securities Commission warning to watch
out for online investment scams, StockHouse Media Corporation is
advising investors to learn the '9 Red Flags' that may help them
spot manipulative messages posted on bulletin boards.
"Even in this market, the use of online financial message boards
is soaring in Canada," says Mr. Chris Serin, Chief Financial
Officer of StockHouse Media Corporation. "Similar to a global
electronic pub for investors, message forums are extremely popular
with those who want to ask questions, share information and offer
their own opinions about stocks, investment trends and the markets
in general."
As message boards continue to gain in popularity, there is an
increased risk that novice investors will be deceived by
unscrupulous users. " StockHouse is re-issuing a checklist,
originally developed and released in 1999, to help investors spot
potential scams," says Mr. Serin.
StockHouse's 9 Red Flags checklist, detailed below, shows some of
the ways in which investors can spot people who may be trying to
manipulate the boards. The greater the number of "Red Flags" an
investor spots when discussing a stock with others, the more
likely it becomes that someone has an ulterior motive for
promoting that particular equity. StockHouse recommends that
investors do their due diligence on any stock before making a
trade.
THE STOCKHOUSE 9 RED FLAGS
1. Someone who hyper-posts on only one stock.
During the promotional run of that stock, the user may be posting
between 8 and 20 messages daily (sometimes more). The user will
promote a stock for only so long, usually until he has sold his
position or until he has fulfilled his obligation to the company
that may have contracted his services.
2. Someone who uses multiple identities.
This is hard to detect. Generally, the poster will run with one
identity until he has become despised on the message boards. Then,
he will register again with a new identity. If one carefully
studies such an individual, it will be found that he/she posts
repeatedly about the same set of stocks, or just one stock. The
poster will post during the same time each day or night. His
messages will usually be the same length. His writing style will
be similar and he will use the same phrases or key words in his
messages.
3. Someone who repeatedly attacks or belittles others on a stock's
message boards.
This goes beyond the simple heated debate with one or two members
who disagree. If you carefully read his messages, this user will
sound like he is fighting for his life with nearly everyone who
challenges him.
4. Someone who emerges as the stock's moderator, or even the
leader of the discussion group on that stock.
This person is different from someone who has a genuine
fundamental understanding of the company. A promoter/leader will
diligently answer virtually every negative comment made on "his"
message board. He will also cheerlead every positive comment and
constantly make an appearance on the message board to "show" he is
still the boss.
5. Someone, with a short history in their member profile, who
suddenly shows up during a stock run-up, and appears to know "all
about" the company.
This person is different from the excited investor, who just
bought shares in the company and is enthusiastic about it. This
kind of poster hints at "inside information" and quickly
name-drops some connection to a company insider or employee. While
the "excited" investor may rave about something an investor
relations employee told him, the impostor hints at important, but
as of yet unannounced, development(s) that may impact the stock
price.
6. Someone who is nearly always the first to respond to company
developments.
Occasionally, someone else will beat him to it. Otherwise, he's
first or a close second almost every time. Commonly, he will
positively spin the news, to soften the blow of bad news or to
make good news appear better than it actually is.
7. Someone who continuously hints at upcoming company
developments, unreleased company news and unannounced contracts.
Where did he get his information? Usually, he is the one who
starts the rumour and might often state that he heard it from
someone else.
8. Someone who hypes the company during the run-up and then
"changes" his mind and begins attacking the company, its insiders
and the project.
This individual carefully controls his statements, both up the
chart and back down. On the way up, he may help the stock move
higher by adding to the cheerleading, so that he can build a
substantial short position. Once he changes his mind, he sticks
with it.
9. Someone who goes out of their way to find bad news about the
company and makes a "case" out of it.
These individuals might include ex-friends, ex-family (divorced)
and ex-employees. Such people don't just post a single negative
item. These individuals either take one negative news angle and
make it look like "the sky is falling" or they continuously raise
it. Frequent appearances by individuals who vent their spleen is
a clue that gives them away. Disgruntled investors usually move on
and don't want to be reminded of their bad investment.
The StockHouse 9 Red Flags are by no means a complete list of
warning signs and should only be used as a guideline to help
pinpoint fraudulent messages and posters.
In closing, it is important to note that not all fraudulent
posters are bullish - some post messages to drive stock prices
lower because of a vendetta or to profit by short selling.
ABOUT STOCKHOUSE MEDIA CORPORATION:
StockHouse Media Corporation is a leading global provider of
popular online financial content and community development
products. StockHouse offers international financial content
aggregation from over 600 sources, original editorial, interviews
with business leaders, a comprehensive equities database and the
Internet's first syndicated message forums, the BullBoards(TM).
StockHouse has established offices and websites in markets around
the world including Canada, the United States, the United Kingdom,
Hong Kong, Singapore, Japan and Australia. StockHouse.com was
recently selected by Forbes as one of the best online sources for
business news.