Thursday, January 06, 2011

Goldman's Facebook Pitch? Or Nigerian Scam?

Kudos to Shira Ovide at the Wall Street Journal for this gem of an article.  Click on over and read the piece - it speaks for itself.

note: also see: Jeff Matthews: A Non Public IPO



Conscience Of a Conservative said...

Anyone see the movie boiler room?

Anonymous said...

Conscience of a Conservative,

Yes, the film Boiler Room was very informative. Are you recommending it?

Since the modern day boiler room has moved to the web, The SEC warnings are also a good recommendation.

Assets Are Large But Revenues Are Small. Microcap companies sometimes assign high values on their financial statements to assets that have nothing to do with their business. Find out whether there's a valid explanation for low revenues, especially when the company claims to have large assets.

Odd Items in the Footnotes to the Financial Statements. Many microcap fraud schemes involve unusual transactions among individuals connected to the company. These can be unusual loans or the exchange of questionable assets for company stock that may be discussed in the footnotes.

Unusual Auditing Issues. Be wary when a company's auditors have refused to certify the company's financial statements or if they've stated that the company may not have enough money to continue operating. Also question any change of accountants.

Insiders Own Large Amounts of the Stock. In many microcap fraud cases — especially "pump and dump" schemes — the company's officers and promoters own significant amounts of the stock. When one person or group controls most of the stock, they can more easily manipulate the stock's price at your expense.

EconomicDisconnect said...

Watch "network" instead.