by: Nicholas Gabriel

Owning several penny stock promotion sites and blogs, a legal disclaimer is a must.  Investing in penny stocks by means of sifting through websites and blogs, reading the disclaimer is a must.  Wall Street and the S.E.C. have long had to deal with penny stock promoters and the pump and dump scheme. 

Pump and dump is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme “dump” their overvalued shares, the price falls and investors lose their money. Stocks that are the subject of pump-and-dump schemes are sometimes called “chop stocks”.

While fraudsters in the past relied on cold calls, the Internet now offers a cheaper and easier way of reaching large numbers of potential investors.

50 Cent and his Twitter account offer an even faster and more efficient way of reaching millions, over 3 millions. 

This past week the New York rapper promoted H&H Imports.  This company is a penny stock traded on Pink Sheets under the ticker HNHI.  Apparently, 50 Cent’s 3.8 million followers heeded his tweets, as HNHI shares saw a 290% jump in one day on Jan. 10, 2011.  But the 9 nine bullet eating rapper didn’t want anything to do with S.E.C. Regulators tweeting shortly after a disclaimer that read as if it were written by a worried lawyer and removed all tweets from his twitter account.  Reports thus far have not said anything about the rapper dumping the stock.

A stock promoter must disclose his positions and compensation for promoting a stock of any sort.  On the Pink Sheets and Over The Counter markets where volume and liquidity are low, large-scale promotions to inflate the stock price while accounts whom hold the stock dump the shares at a higher price have plagued Regulators. 

A civil lawsuit filed Friday by the U.S. Securities and Exchange Commission alleging that Christopher Wheeler, 43, promoted low-priced stocks in 2007 and 2008 on his OTCStockExchange.com website. The SEC said he recommended them to investors even as he received millions of shares in those same companies as payment for promoting them and as he was selling off the shares.

In short, promoting stocks that you are dumping is a big NO NO! As a matter of fact there is a fine line to promoting stocks, just don’t do it!  If anything, a promoter should promote the company, not the stock.  Be cautious if a promotion effort is solely cased on the stock, it’s price, it’s movement, etc..  And if you are on a page that promotes penny stocks, pink sheets, or otc stocks, read the disclaimer.  For the most part people promoting a stock have interest in the stock. 

And that’s the Bull on The Street!

When you talk about money you must mention Wall Street; a little street in Manhattan, New York with a large wallet. Where the movers and shakers move billions of dollars and stocks to facilitate the needs of multinational corporations. The finance capital of the world some say. But what is Finance exactly?

Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money, risk and how they are interrelated. It also deals with how money is spent and budgeted.

Wall Street deals mainly with finance in general, with all three general areas of finance making their way to Wall Street in one form or another. Today, as opposed to a few years ago before the real estate bubble, money is not moving as rapidly as before. Volume, the amount of stock traded daily, is lower. And companies like Google, Apple, and Microsoft are holding large cash positions. Apple stock is trading at an all time high and seems to be in a lucrative position to acquire, make deals, and/or underwrite new business proposals. None of the latter has happened to the extent that is possible. Why does this matter?

Well on Wall Street, money not moving, is money not growing, and that’s not good. As noted earlier, Apple is trading at an all time high, meaning that they have to sell less shares to raise one million dollars then they had to previously. The financial media has made news of this asking why the cash isn’t being spent, when is it going to be spent, or is it going to be spent. Wall Street will propose deal after deal but I am not convinced this is the solution. The investment bankers only get paid the big bucks when they close the deal so they are in a rush. If a company acquires too much, the CEO may have problems handling an infrastructure that is too large. The time constraints may also not achieve the best returns for those involved.

On the other side of the coin, stocks (companies) are cheap right now. A high stock price may not stay high, and the economy would benefit from investments in smaller companies by the large caps. There are micro cap stocks that have sound fundamentals which could use an infusion of capital, and the larger cap investing could always use the return. What will The Street do? They will wait, but for sure they will be a force in advising the companies to invest and/or spend on deals. For now they wait on the sidelines but rest assure they are there with private placements and preferred stocks in hand.

by Corie Nicole