Nasdaq Regulation Head Warns Investors About On-Line Tips
May 04, 2011
WASHINGTON -- A top securities market regulator Thursday urged investors to be wary about hot stock deals on the Internet and unveiled a program to educate people about potential manipulators lurking in cyberspace. ``It's absolutely critical for investors to understand that information and messages posted anonymously on-line should be viewed with caution and a healthy dose of skepticism,'' said Maryalice Parson, president of NASD Regulation Inc., which polices the nation's 510,000 brokers and 5,000 firms. Under the program, Motley Fool, a forum on America Online known as a haven for rumor mongering about stocks, agreed to post consumer warnings and will set up an e-mail connection for investors to complain to NASD Regulation. CompuServe's Investor Forum and Prodigy's Money Talk Bulletin also posted warning messages. NASD Regulation is distributing a new brochure, available on its new World Wide Web page, to caution investors about using the Internet as an investment research tool. ``Investors need to understand that while they might be reading honest conversations, they could just as easily be looking at the work of a corporate insider, stock promoter or short seller,'' Ms. Parson said. Ms. Parson said the investor education push came after an informal study of on-line messages showed promotions of Comparator Systems Corp. and other small stocks traded on the Nasdaq Stock Market coincided with price and volume movements in the stocks. In May, the Securities and Exchange Commission filed a fraud lawsuit against California-based Comparator and three officers, alleging the firm misled investors about its finances and development of new fingerprint identification technology.
