1. Don’t buy penny stocks
2. Don’t buy penny stocks over the phone from a broker or promoter
3. Don’t buy penny stocks over the phone from a broker or promoter who is based in Florida
Penny stocks are for idiots or people complicit in what’s about to happen in a manipulation scam. Anything pitched aggresively over the phone is going to lose you money. Anything pitched from Florida is guaranteed to be dangerous and a scam – Florida’s Homestead Act (which protects your house from any legal judgements against you) continues to attract every thieving, lying scumbag in sight. I’ve known lots of bad brokers and stock scammers, most of them ran from NY and NJ to Florida over the years.
Amazingly, people still respond to penny stock cold calls in this country. I almost feel like they deserve to get robbed for being so stupid. Almost.
SEC bust today:
SEC Charges Boiler Room Operators in Florida-Based Penny Stock Manipulation Scheme01/26/2012 04:24 PM EST
FOR IMMEDIATE RELEASE
Washington, D.C., Jan. 26, 2012 – The Securities and Exchange Commission today charged a Fort Lauderdale-based firm and its founder with conducting a fraudulent boiler room scheme in which they hyped stock in two thinly-traded penny stock companies while behind the scenes they sold the same stock themselves for illegal profits.
The SEC alleges that First Resource Group LLC and its principal David H. Stern employed telemarketers who fraudulently solicited brokers to purchase stock in TrinityCare Senior Living Inc. and Cytta Corporation. While recommending the securities in these two microcap companies, Stern sold First Resource’s shares of TrinityCare and Cytta stock unbeknownst to investors who were purchasing them – a practice known as scalping. As Stern was selling the stocks, he also purchased small amounts in order to create the false appearance of legitimate trading activity and induce investors to purchase shares in both companies.
“First Resource and Stern used a telephone sales boiler room to make inflated claims and defraud investors while simultaneously manipulating the price of the stocks and making profits for themselves,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “The SEC will continue to aggressively pursue perpetrators of microcap stock fraud schemes that hound potential investors to buy stock.”
Don’t worry, the rodents will pay fines or scatter and be selling shares of Facebook they don’t actually own soon enough.