I wrote that column the night before leaving on a trip to Korea. While I was in Korea, I was e-mailed by people from Enron, Williams Communications (NYSE: WCG), and several Fools knowledgeable in this area. I'm going to call Enron and Williams this week, and we'll go over those conversations in upcoming columns. Meanwhile, let me quote a Fool who works in this business for a privately held company:
A Penny Stock Scam
Now, let me go a little off topic from Drips and mention a new version of a penny stock scam that a woman sitting next to me on the plane I took back from Asia told me about. She owned shares in a major company listed on the Nasdaq, and apparently had posted some thoughts on it in various message boards. She received an official looking e-mail informing her that her company was spinning a new company off in an IPO. To get in on it, she only needed to buy shares in the new company, and for each share she bought, she would get an additional 15 shares "after the IPO."
Well, she bought the shares of the other company through her broker. I pointed out to her that this meant an IPO had already happened. She also had no written communication from the Nasdaq company she owned the stock in -- another bad sign. When I got home, I looked up the company that was "having an IPO" and guess where it's listed? It isn't; it's a bulletin board stock and isn't even selling for a dollar a share. A penny stock hustler harvested her name from a message board and sent her an official looking e-mail to build up sales for a pump and dump scheme. She bought the stock at $6 a share by the way.
I personally can't feel too smug about online scams. I got one I almost fell for in Korea. I was sent a "Hallmark Greeting" in an official e-mail. However, it didn't identify who sent me the "greeting." I went to the site (which looked quite official), and there was a warning advising me that my anti-virus software might say a virus was being downloaded. I was told to "just ignore it" (uh-oh). The anti-virus software promptly came up and warned me that the site was trying to download a "Trojan horse," which I assume was meant to steal my AOL password. To be sure, I changed my password once I got home.
Please be careful with anything you receive online. Don't download files or visit links sent to you by unknown senders. Don't give out any of your passwords to anyone online. Be leery of investment advice, or "shareholder communications," that can't be confirmed. It's important to be skeptical about anything that requires you to spend money, and of course if something sounds too good to be true, it usually is just that.