PRESS RELEASE FOR IMMEDIATE RELEASE
Contact: James B. Ropp, Securities Commissioner
Phone: (302) 577-8925
Date: August 20, 2004
(Wilmington, DE): Attorney General Jane Brady announced today that the Securities Unit of her office has received a number of citizen complaints about unsolicited telephone messages, that they have received on their home answering machines, in which the caller suggests investment in certain stocks. These messages are intentionally designed to appear to be messages left on the potential investorís message machine inadvertently. The messages purport to be for someone other than the person receiving them as a result of a "wrong number." In most of the complaints, the messages appear scripted and are strikingly similar.
∑ A female voice purportedly leaves a message for a fictitious friend. After some idle talk, the caller relays to her friend that she has received a "sure thing" stock tip from a stock broker friend of hers. On one message the stock was represented as selling for fifty cents a share and was expected to go to five dollars a share in the immediate future. On the message, the caller then tells her friend that she is going to buy large quantities of the stock for herself and encourages her friend to do the same.
∑ The obvious purpose of these fictitious messages is to create a buzz about a specific, generally unknown, stock. Whoever has caused these messages to be transmitted is hoping that investors, thinking that they have inadvertently intercepted a secret "hot" stock tip on a sure winner, will be tempted to make large purchases, temporarily driving up the price of the "thinly traded" stock. In the instances the Securities Unit has examined, the stocks in question have had very little activity before the calls were made and had huge increases in sales volume the week the fictitious messages were sent out. A short time later, the trading activity ultimately decreases, driving the price down.
∑ In most cases, such unsolicited tips are part of what is called a "pump and dump" scheme. The perpetrator buys the stock (or options) at the low "pre-buzz" rate and then sells the shares when the price is temporarily inflated by the tip. The later buyers are then stuck at unsupportable inflated stock prices. Investors should be aware that these stock tips can also come from almost any source, such as, internet chat rooms, internet bulletin boards, unsolicited calls, e-mail or word of mouth.
Attorney General Brady stated, "Investors should not invest their money based upon an unsolicited tip, and should be even more skeptical when the tips are, as they were in these cases, anonymous."
If anyone has information relating to these telephone messages, or has invested on the basis of such a message, please call the Securities Unit of the Attorney Generalís Office at (302) 577-8925.