Nova Law

Switching from Momentum to Micro Cap Companies

So Cara wants you to switch to his preferred microcap stocks? Let's review what the Securities and Exchange Commission has to say about this:

"The lack of reliable, readily available information about some microcap companies can open the door to fraud. It's easier for fraudsters to manipulate a stock when there's little or no information available about the company.

Microcap fraud depends on spreading false information. Here's how some fraudsters carry out their scams:

<b>E-mail Spam</b>
Fraudsters distribute junk e-mail or "spam" over the Internet to spread false information quickly and cheaply about a microcap company to thousands of potential investors. Spam allows the unscrupulous to target many more potential investors than cold calling or mass mailing.

<b>Internet Fraud</b>
Fraudsters often use aliases on Internet bulletin boards and chat rooms to hide their identities and post messages urging investors to buy stock in microcap companies based on supposedly "inside" information about impending developments at the companies.

<b>Paid Promoters</b>
Some microcap companies pay stock promoters to recommend or "tout" the microcap stock in supposedly independent and unbiased investment newsletters, research reports, or radio and television shows. Paid promoters are generally behind the unsolicited "junk" faxes you may receive, touting a microcap company. The federal securities laws require the newsletters to disclose who paid them, the amount, and the type of payment. But many fraudsters fail to do so and mislead investors into believing they are receiving independent advice.

<b>"Boiler Rooms" and Cold Calling</b>
Dishonest brokers set up "boiler rooms" where a small army of high-pressure salespeople use banks of telephones to make cold calls to as many potential investors as possible. These strangers hound investors to buy "house stocks" — stocks that the firm buys or sells as a market maker or has in its inventory.

<b>Questionable Press Releases</b>
Fraudsters often issue press releases that contain exaggerations or lies about the microcap company's sales, acquisitions, revenue projections, or new products or services. These fraudulent press releases are then disseminated through legitimate financial news portals on the Internet."

More here:

www.sec.gov/investor/p...

Cara may think that being in Canada, he is beyond the jurisdiction of the SEC. He would be wrong.