Signs of a Scam
Posted by: greedy__malone Date: Sunday, December 27, 2009 10:38:10 AM
In reply to: None Post # of 1113
A: Signs of a Scam
1. Lack of communication from the company.
2. No verified/legitimate physical place of business.
3. Incomplete/unprofessional looking website with very old updates, or used for direct shareholder communication.
4. Brand new flashy website and corresponding PR, both providing only bits of vague information.
5. Company officers/employees involved in other penny stocks. (hint: use google)
6. Over-optimistic, hype filled, "too good to be true" statements from the company.
7. Press Releases (PR's) with vague, inconclusive language, insubstantial details, and/or no hard numbers.
8. Multiple PR's in a day, week, or other short period of time falling into the category above.
9. Business models or products that just don't seem "right". (hint: ask yourself, "Would I buy this?")
10. No follow-through on promises by management, eg. financials, share structure updates, uplistings, etc.
11. A company that seems focused on the stock price and not the business.
12. A pinksheet holding company with no actual owned holdings.
13. A company that changes its business entirely, eg. going from petrified wood salvage to lottery machines.
14. A company that pops up quickly into a newly hot business sector, often world news related.
15. Employees immediately dumping stock received through a compensation program.
16. A history of company name changes, symbol changes, and reverse splits.
13. Incessant Dilution - See Part B
B: Signs of Dilution
1. Gagged Transfer Agent (TA). More Info
3. Inability to get a current share count from the company. More Info
2. Increasing Outstanding/Authorized share counts.
3. Constant decline in price with rapidly increasing volume on chart.
4. Decline in price with no material event as a cause.
5. Large, even blocks of shares continually hitting the bid. M
6. A history of Reverse Splits after running the share price into the ground.
7. The opening of a 504 Reg. D program.
8. Convertible debenture programs disclosed in financials or company communication.
9. Heavy coverage by penny stock promoters, mindless pumping on message boards, spam emails.
10. History of pump and dump action on the chart. 1-3 day quick runs followed by steep high volume drops.
11. Blaming low price and decrease in price on Shorting and Market Makers (MM's).
11. Several signs of being a scam - See Part A.
