The SEC, in a page designed to help those interested in investing in Microcap stocks advises people to check out the people running the company. What happens when that information is concealed? Investors often feel the rub.
Microcap companies – What’s So Important About Public Information?
In the microcap world, consultants or people who lend money to micro companies who then can’t pay the debts back then have to pay in large blocks of stock, which they usually sell off fast and drive the price of the stock to nothing. Often, the same consultants and lenders go from company to company repeating the same frauds. Investors have a right to know the history of an individual in control of their money. If an individual has any ties to past scam companies, this information is either totally concealed or hard to find.
“Of potentially greater concern is that 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.”
“Publicly-available information about microcap stocks, including penny stocks often is scarce. This makes it easier for fraudsters to spread false information. In addition, it is often easier for fraudsters to manipulate the price of microcap stocks because microcap stocks historically have been less liquid than the stock of larger companies.”
Before investing in a microcap, the SEC advises:
- Read carefully the most recent reports the company has filed with the SEC and pay attention to the company’s financial statements, particularly if they are not audited or not certified by an accountant.
- Check out the people running the company with your state securities regulator, and find out if they’ve ever made money for investors before. Also ask whether the people running the company have had run-ins with the regulators or other investors.
Who pulling the strings inside a company is a significant information that investors in all types of publicly traded companies should have the right to. But often if you read the fine print of a financial report you will find a statement like these: (pulled from real reports)
“On September 4, 2015, the Company entered into a consulting agreement, effective October 1, 2015, for an initial term of three months”
“the Company entered into consulting agreements with four sons of its President, for their respective consulting services at a rate of $29,000, respectively.”
With Who? Or the consulting agreement will be with a company, you have no idea who the actual people are you’re giving your money to. If you look up the company it can be some ambiguous company registered to another company.
Information is investors best weapon against fraud. Fraudsters don’t want their information public.
This is why we support reporters like Teri Buhl, be thank ful for her trademark “Smashmouth Investigative Journalism” probing and asking the questions and reporting stories fraudsters don’t want told. She dug deep into the NIR debocal that caused investors to lose millions that the government could never recover. All this is relevant to this site because of NIRs storied PIPE deal finder Eric Noveshen – knowing the players is important when thousands of people have their money on the line.http://www.teribuhl.com/2011/11/23/pwc-says-nir-group-doesnt-have-access-to-dealer-market/
Some of the comments posted on her reports:
December 9, 2011 at 1:06 pm
Can you please look into the NIR payment arrangement with the Itronics settlement.
I think you’ll be startled at what you uncover. In a nutshell, Itronics has been committing fraud on multiple levels. They agreed to settle with NIR for $8M+ payable in shares or cash. The company has zero cash yet they only added about $600k worth of shares to their outstanding share count since the May 4, 2011 payout commencement date. This means NIR is being paid in something other than just shares. It’s widely speculated that ITRO is grossly understating revenues and selling silver off the books to pay this settlement or some other nefarious scheme. Perhaps they have a deal with silver? Nobody knows for sure but I’d bet my bottom dollar that NIR is receiving dirty money from ITRO and may very well be complicit in the scheme.
Itronics the good ole fertilizer company, Eric Noveshen had his hand in that cookie jar. Last year he claimed he wasn’t connected to NIR, for good reason, but don’t investors have the right to know? https://www.sec.gov/litigation/litreleases/2011/lr22106.htm
From a 2009 deposition of Corey Ribotsky:
Curt Kramer? Connect the dots again…Noveshen worked with Kramer in a pump and dump of a Florida based company, SMEV that resulted in a federal lawsuit in 2012, Allen Licht v. Ajene Watson et. al (Noveshen was a defendant). Bet Allen Licht wish he knew this information prior to signing a deal with him.
Curt Kramer was blacklisted by FINRA in 2013.
EDWY, edoorways – another pump and dump Noveshen benefited from in 2009-10, as noted in Allen Licht v. Ajene Watson et. al. Warning: the circle isn’t too big folks.