Mining Company research board

[pitboss22]

Paid promotions.....just "Marketing"????

Penny stock pump and dumps are on the rise. You may have seen them in your e-mail, a free penny stock newsletter, or chat room - the next "hot" penny stocks that are going to make everyone rich.

George Samragdis, a spokesman for the Financial Industry Regulatory Authority, or FINRA, which polices U.S. brokerage firms, states that, "Information technology allows con artists to reach victims more easily." Using tactics such as false urgency, fake credentials, and unrealistic experience, they cast dubious penny stocks in a much too positive light, which encourages unsuspecting investors to buy shares.

Penny stocks being used for pump and dumps are chosen because they are almost worthless to begin with. It is easy to manipulate the prices of their shares by misrepresenting that penny stocks' prospects. The more they lie to you, the more unsuspecting investors buy in, and the more money these penny stock pump and dump artists in make off of worthless penny stocks.

According to the S.E.C., a pump and dump generally starts with a promoter purchasing a huge amount of shares in some penny stock on it's last legs, for a very low price (RRHI has 990 million shares authorized, Mabwe Minerals will start with 500 million).

Then they will pepper the Internet with e-mails, and free newsletters about the penny stock in question all designed to generate more buying from unsuspecting investors. In many cases, what looks like a legitimate penny stock report is actually a paid advertisement, which can be seen in their lengthy, fine-print disclaimers.

When asked how these penny stock promoters get away with it, one analyst and author explains that the S.E.C. requirements about penny stock promotion aren't strict enough, nor are they appropriately policed. He asserts that these promoters should remember that, "just because they aren't getting stopped doesn't mean that it's right."

"Some people forget their ethics and try to ride along with the penny stock pump. They need to remember that every dollar they made riding along with the penny stock promotion is a dollar taken out of another person's pocket - usually a naive but trusting penny stock investor, or an old lady who is desperate in this economy."

Good companies don't need to pay stock touts, their results speak for themselves.