SEC Defines Due Diligence for Dodd-Frank ABS Certification Requirements

On May 28, 2011, as part of its ongoing efforts to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) approved for public comments (which will be accepted until July 18, 2011) proposed rules pursuant to Section 932 that would require nationally recognized statistical rating organizations (NRSROs), issuers and underwriters to make public the findings and conclusions of any due diligence reports prepared by a third-party service provider in an asset-backed securities transaction. Such third-parties would also have to furnish a certification to each NRSRO rating the securities.

Since the Dodd-Frank Act does not define “due diligence services,” the SEC has identified four categories of reviews, and thus has defined “due diligence services” in the proposed Rule 17g-10 to mean “an entity that engages in a review of the assets underlying an Exchange Act-ABS for purposes of making findings with respect to:

quality or integrity of the information or data about the assets provided, directly or indirectly, by the securitizer or originator of the assets;
whether the assets origination conformed to stated underwriting or credit extension guidelines, standards, criteria or other requirements;
value of collateral securing such assets;
whether the assets originator complied with federal, state or local laws or regulations; and
any other factor or characteristic of such asset that would be material to the likelihood that the issuer of the Exchange Act-ABS will pay interest and principal according to its terms and conditions.”

Proposed Rule 17g-10 will also define “issuer” to include a sponsor (as defined in 17 CFR 229.11) or depositor (as defined in 17 CFR 229.1011) that participates in the issuance of an Exchange Act-ABS. The terms “originator” and “securitizer” as used in proposed Rule 17g-10 will have the meanings stated in Section 15Gf of the Exchange Act.

An issuer or underwriter is not required to furnish a Form ABS-15G if such issuer or underwriter obtains a representation from each NRSRO engaged in the rating of the Exchange Act-ABS that the NRSRO will publicly disclose the findings and conclusions of any third-party due diligence report obtained by the issuer or underwriter. The NRSRO must disclose the finding and conclusions of any third-party due diligence report with the publication of the credit rating in an information disclosure form prepared pursuant to new paragraph (a)(1) of Rule 17g-7 no less than five business days prior to the first sale in the offering. Rule 17g-7 as amended by the proposed rules, would require an NRSRO to disclose in the information disclosure form:

whether and to what extent it relied upon third-party due diligence services;
description of the information that such third-party reviewed in conducting its due diligence services; and
description of the findings or conclusions of such third-party.

Also in accordance with Section 15E(s)(4)(C) of the Exchange Act, the SEC proposed that the format of the certification in Form ABS Due-Diligence-15E include the following line items:

identity and address of the provider of the third-party due diligence services;
identity and address of the issuer, underwriter or NRSRO that hired the provider of the third-party due diligence services;
identity of each NRSRO that published criteria for performing;
scope and manner of the due diligence performed, including but not limited to the type of assets that were reviewed, the same size of the assets reviewed, how the sample size was determined and any other type of review conducted with respect to the assets; and
findings and conclusions resulting from the review.

In addition, any individual executing the Form ABS Due Dilignce-15E on behalf of a third-party due diligence provider will be required to represent that he/she executed the form on behalf of, and on the authority of, the third-party due diligence provider and the third-party due diligence provider conducted a complete due diligence review.

June 26th, 2011|Dodd-Frank|

Financial advice show hosts have host of problems

Just about any time of the day, the airwaves are filled with self-appointed financial gurus spewing their secrets for managing money and ways to get rich. But the true secrets of more than a dozen of these wealth peddlers may be in their shady backgrounds and off-the-air dealings. Here are a few examples of the bamboozlements, as disclosed by the Securities and Exchange Commission (SEC) and other authorities.

On June 13, 2011, Clifford Robertson was sentenced to 97 months for bank fraud, to be followed by 24 months for aggravated identity theft and ordered to pay $4,627,520 in restitution, according to a statement by the U.S. Department of Justice’s Federal Bureau of Investigation Dallas Field Office. The bureau’s investigation determined that Robertson claimed to be a real estate investment advisor who hosted AM radio real estate investment talk shows and in-person seminars. Robertson admitted that beginning in December 2007, he used the identity of another person to submit a fraudulent personal financial statement to a lending institution in order to obtain money by false pretenses. The loss to investors was estimated at around $3 million.

Another recent financial show host shakedown was announced in a June 3, 2011 press release by the Department of Justice’s U.S. Attorney’s office for the Southern District of Florida which said that “criminal information was filed against Anthony F. Cutaia, charging him with nine counts of mail fraud…” Cutaia, who was the host of “Talk About Mortgages and Real Estate,” a television and radio program, was also the managing member and beneficial owner of CMG Property Investment Group, LLC, which purportedly engaged in commercial real estate investments in Florida, and promised not to collect commissions or fees from the investors until the properties were sold and a profit was made. However, court papers allege that Cutaia invested little of the money and instead used it to make payments to pre-existing investors and to pay his own business and personal expenses. Legal documents further show that Cutaia filed for bankruptcy in 2007, but that case was tossed out. He filed another Chapter 7 petition on May 11, 2011.

Also exposed this year was John Farahi, a host on a Farsi language radio station in the Los Angeles area. The SEC’s complaint filed in the U.S. District Court for the Central District of California alleges that NewPoint, co-owners John Farahi and Gissou Rastegar Farahi, and its controller Elaheh Amouei targeted investors in the Iranian-American community by touting NewPoint on a daily finance radio program hosted by Farahi. The SEC charges that the Farahis or Amouei would then make appointments with interested listeners to discuss investment opportunities offered by NewPoint, and subsequently misled more than 100 investors into purchasing over $20 million worth of debentures that they claimed were low risk. Many investors also were falsely told that they were investing in FDIC-insured certificates of deposit, or government or corporate bonds issued by companies backed by the funds from the Troubled Asset Relief Program (TARP). According to the SEC, most of the money raised was instead transferred to accounts controlled by the Farahis to, among other things, fund construction of their multi-million dollar personal residence in Beverly Hills.

June 18th, 2011|Educational Series, Fraud|

Dodd-Frank rule disqualifies felons and bad actors from securities offerings

On May 25, 2011, the Securities and Exchange Commission (SEC) proposed a rule to deny certain securities offerings from qualifying for exemption from registration if they involve “felons and other bad actors.”

When an individual or a company offers or sells a security such as a stock or bond, generally the offering must be registered with the SEC. However, the SEC’s Regulation D provides three exemptions that can used to avoid such registration. The most widely used exemption is Rule 506, which accounts for more than 90% of the offerings made, as well as the majority of capital raised. If an offering qualifies for the Rule 506 exemption, an issuer can raise unlimited capital from an unlimited number of “accredited investors” and from up to 35 non-accredited investors.

Section 926 of the Dodd-Frank Act requires the SEC to adopt rules that would deny this exemption to any securities offering in which certain “felons and other bad actors” are involved. This new rule is substantially similar to the bad actor disqualification provisions of another limited offering exemptive rule – Rule 262 of Regulation A – which provides for an exemption from registration for certain small offerings.

Under the proposed rule, an offering cannot rely on the Rule 506 exemption if the issuer or any other person covered by the rule (including the issuer’s predecessors and affiliated issuers, directors, officers, general partners and managing members of the issuer, 10% beneficial owners and promoters of the issuer, persons compensated for soliciting investors, and the general partners, directors, officers and managing members of any compensated solicitor) has had a “disqualifying event” identified as follows:

Criminal conviction in connection with the purchase or sale of a security, making of a false filing with the SEC or arising out of the conduct of certain types of financial intermediaries. The criminal conviction would have to have occurred within 10 years of the proposed sale of securities (or five years, in the case of the issuer and its predecessors and affiliated issuers).

Court injunction and restraining order in connection with the purchase or sale of a security, making of a false filing with the SEC or arising out of the conduct of certain types of financial intermediaries. The injunction or restraining order would have to have occurred within five years of the proposed sale of securities.

Final order from state securities, insurance, banking, savings association or credit union regulators, federal banking agencies or the National Credit Union Administration that bar the issuer from: 1) associating with a regulated entity; 2) engaging in the business of securities, insurance or banking; 3) engaging in savings association or credit union activities, or 4) orders that are based on fraudulent, manipulative or deceptive conduct and are issued within 10 years before the proposed sale of securities.

Certain commission disciplinary order relating to brokers, dealers, municipal securities dealers, investment companies and investment advisers and their associated persons, which would be disqualifying for as long as the order is in effect.

Suspension or expulsion from membership in a “self-regulatory organization” or from association with an SRO member, which would be disqualifying for the period of suspension or expulsion.

Commission stop order and order suspending the Regulation A exemption issued within five years before the proposed sale of securities; and

U.S. Postal Service false representation order issued within five years before the proposed sale of securities.

The proposed rule would provide an exception from disqualification when the issuer can show it did not know and, in the exercise of reasonable care, could not have known that a disqualification existed. Any pre-existing convictions, suspensions, injunctions and orders would be disqualifying. For further information, see http://www.sec.gov/rules/proposed/2011/33-9211.pdf

May 26th, 2011|Dodd-Frank, Educational Series, Legislation|

Spotlight on insider trading

Many people associate the term “insider trading” with illegal conduct. But the term refers to both legal and illegal activities. The SEC’s legal version is that corporate insiders, i.e., officers, directors, employees, or anyone with at least a 10% stake in a company, can buy and sell stock in the company providing they abide by the SEC’s restrictions and transactional requirements.

In 2002, the SEC tightened its rules by adopting the Regulation Fair Disclosure to curb the practice of company executives giving securities analysts an inside track; the rules mandate that anything disclosed to an outsider must be revealed to the general public. The SEC also includes in its definition of insiders those who have “temporary” or “constructive” access to the material information, such as business associates, friends, family members, brokers, attorneys and “other tipees.” The U.S. Supreme Court ruled recently that any individual, with or without ties to the particular company, who is in possession of material information, even if the information was stolen, is an insider.

Illegal insider trading, according to the SEC, refers to the buying or selling of a security in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information. Insider trading violations include “tipping” such information, trading in securities by the person “tipped” and trading by those who misappropriate the information.

The SEC considers the prosecution of insider trading violations a top priority. The exhaustive publicity of illegal insider trading cases sends a strong message that no one is outside its radar. A spokesperson for the Division of Enforcement said that the SEC is aggressively rooting out and identifying hard-to-detect insider trading by connecting patterns of trading to sources of material nonpublic information, whether those sources are law firms, banks or others with a duty to keep the information confidential. Prosecutors add that illegal trading is now easier to prove as direct evidence of fraudulent intent can be obtained through wiretaps, e-mails, text messages, social media contacts, etc. And that evidence also is useful to convince co-conspirators to turn on each other and provide even more substantial proof of fraud. Going after the violators is critical because their actions hurt individual investors and undermine public confidence that allows firms to raise money in the capital markets.

Individuals who are convicted of criminal insider trading face prison terms (the Sarbanes-Oxley Act extended the maximum length of sentences) and fines in addition to civil penalties, which can be triple the realized profit or the loss avoided. Violators also may be charged with mail and wire frauds and possibly with tax evasion and obstruction of justice. Further consequences include being barred from serving as executives or directors of public companies and being named as defendants in multi-million dollar lawsuits. Corporations are subject to penalties for failure to establish compliance programs and for failure to ensure reasonable efforts to prevent violations under the theory of “controlling person” liability. Even if an insider trading investigation does not result in formal charges, the company’s reputation may suffer from the stigma and adverse publicity.

May 24th, 2011|Educational Series|

Investment advisers miss deadline for filing new “plain English” ADV Part 2

For most investment advisers, the deadline for preparing and submitting the new Form ADV Part 2 was March 31, 2011, and many missed it, according to industry sources. All investment advisers registered with the SEC are mandated to file the new Form ADV Part 2 or disclosure brochure within 90 days of their fiscal year end. For the majority, the fiscal year ends on December 31, which means that the new form should have been filed by March 31, 2011. Most state securities regulators have ratified similar requirements.

Securities lawyers indicate that investment advisers who missed the filing deadline are likely in violation of several investment advisory rules, and may be subjected to possible actions by the regulators, ranging from warnings and fines to revocation of registration. At a minimum, a failure to submit the new form may flag the adviser as lacking strong compliance controls and requiring heightened scrutiny.

The new form rulings, adopted by the SEC in October 2010, required 18 sections on fees, soft-dollar pay arrangements, investment strategies and disciplinary histories, along with a supplement detailing each adviser’s background. An SEC spokesperson said that the changes “will allow clients access to information about advisers of a wholly different character and quality than was available under the previous regime. It will enable investors to better evaluate their current advisers, or comparison-shop for an adviser that best serves a particular need. Most significantly, this disclosure may result in advisers modifying their business practices and compensation policies which may pose conflicts, in ways that better serve the interests of the clients.” For more information, see http://www.sec.gov/answers/formadv.htm.

April 28th, 2011|Educational Series, Legislation|

Tips from the SEC on how fraudsters try to look legit

Since their inception, the Securities and Exchange Commission (SEC) and securities regulators around the globe have been telling investors to investigate before investing and to ask tough questions about the people who sell and manage the investments.

The SEC reports that a frequent ruse that fraudsters use involves assurances that an investment has been registered with the appropriate agency. The fraudsters will purport to provide the agency’s telephone number to verify the “authenticity” of their claims. But even if the agency does exist, the contact information almost certainly will be false, and instead of speaking with an actual government official, the call is answered by the fraudsters or their associates, who will give the company, the promoter and the transaction high marks.

Another trick involves the misuse of a regulator’s seal. The fraudsters copy the official seal or logo from the regulator’s Web site, or create a bogus seal for a fictitious entity and then use it on documents or Web pages to make the deal look legitimate. The SEC and other state and federal regulators do not allow private entities to use their seals. Moreover, the SEC does not “approve” or “endorse” any particular securities, issuers, products, services, professional credentials, firms, or individuals.

Here is some advice from the SEC on how to protect yourself against these and other deceptive tactics:

	Deal only with “real” regulators. Check the list of international securities regulators on the Web site of the International Organization of Securities Commissions (IOSCO); for a directory of state and provincial regulators in Canada, Mexico, and the U.S.; look on the Web site of the North American Securities Administrators Association (NASAA). If someone encourages you to verify information about a deal with an entity that does not appear on these lists — such as the “Federal Regulatory & Compliance Department,” the “Securities and Registration Compliance” agency or the “U.S. Securities Registration Bureau” — you’re probably dealing with fraudsters. Legitimate contact information for the SEC is in the (SEC) Contact Us section and on the SEC Division Homepages.
	Be skeptical of government “approval.” The SEC does not evaluate the merits of any securities offering or determine whether a particular security is a “good” investment. Instead, the SEC’s staff reviews registration statements for securities offerings and declares those statements “effective” if the companies have satisfied the disclosure rules. In general, all securities offered in the U.S. must be registered with the SEC or must qualify for an exemption from the registration requirements. You can check whether a company has registered with the SEC and download disclosure documents using the EDGAR database of company filings.
	Look past fancy seals and impressive letterheads. Most people who use computers know how easy it is to copy images. As a result, today’s technology allows fraudsters to create impressive, legitimate-looking Web sites and stationery at little cost. Don’t be fooled by a glossy brochure, a glitzy Web site, or the presence of a regulator’s official seal. Again, the SEC does not authorize private companies to use its seal, even as a legitimate link to the SEC Web site.
	Check out the broker and the firm. Always verify whether any broker offering to buy or sell securities is properly licensed to do business in your state, province, or country. If the person claims to work with a U.S. brokerage firm, call FINRA’s Public Disclosure Program hotline at (800) 289-9999 or visit FINRA’s website to check out the background of the individual broker and the firm. Be sure to confirm whether the firm actually exists and is current in its registration, and ask whether the broker or the firm has a history of complaints. You can often get even more information from your state securities regulator.
	Be wary of “advance fee” or “recovery room” schemes. An increasing number of investment-related frauds target investors worldwide who purchase “microcap” stocks, the low-priced and thinly traded stocks issued by the smallest of U.S. companies. If the stock price falls or the company goes out of business, the fraudsters swoop in, falsely claiming that they can help investors recover their losses for a substantial fee, disguised as some type of tax, deposit, or refundable insurance bond. As soon as an unwary investor pays the “advance fee,” the fraudsters disappear leaving the investor with even higher losses. For more information about these types of frauds, read The Fleecing of Foreign Investors.

March 28th, 2011|Educational Series, Fraud|

Wall Street firms slow in reporting infractions to FINRA

The Financial Industry Regulatory Authority (FINRA), Wall Street’s self-reporting system that allows investors to vet stockbrokers and other financial professionals, says that it has a persistent problem with financial firms not reporting infractions properly or in a timely manner.

FINRA, which shares oversight of Wall Street with federal agencies such as the Securities and Exchange Commission (SEC), requires financial firms to disclose employee infractions within 30 days. Those records, ranging from serious criminal offenses to minor customer complaints, are then entered into a database known as the Central Registration Depository. Individual investors use the 30-year-old system to check out a stockbroker’s history, including employment, criminal records and client lawsuits. Institutions use the database to investigate job candidates.

FINRA depends on Wall Street, which finances its operations, to update the records. But dozens of new cases show that critical information is missing, out of date or erroneous. And Wall Street has a checkered history of reporting infractions by brokers. When regulators last cracked down on disclosure violations in 2004, the sweep ensnared nearly 30 securities firms. At the time, the National Association of Securities Dealers, FINRA’s predecessor, fined brokerage firms a collective $9.2 million for failing to report customer complaints and criminal convictions properly. That same year, Morgan Stanley was hit with a $2.2 million penalty, the largest ever levied against a firm for disclosure issues, for failing to appropriately report 1,800 incidents of customer complaints and other problems. In 2010, the regulator suspended 56 brokers for failing to report previous infractions, up from 34 in 2006. Annual fines rose to $2 million from $1.6 million over the same period.

In one of the most prominent cases in 2010, FINRA fined Goldman Sachs $650,000 for failing to disclose that a trader, Fabrice P. Tourre, and another employee had received an SEC “Wells” warning that the agency was considering an enforcement action against them. Tourre was the only individual named in the SEC fraud case against Goldman Sachs last year, which accused the investment bank of misleading investors about subprime mortgages. Tourre purportedly was ”principally responsible” for marketing the bonds. Goldman, without admitting or denying any wrongdoing, settled the SEC’s charges in July 2010 for $550 million – one of the largest fines ever paid by a Wall Street firm. The charges against Tourre are pending.

Also in 2010, FINRA fined Citigroup $150,000 for filing inaccurate disclosures regarding about 120 brokers who had been fired or resigned after being accused of theft or fraud. In its disciplinary action, FINRA said that Citigroup ”hindered the investing public’s ability to access pertinent background information.” It fined JPMorgan Chase $150,000 for similar violations in 2009.

FINRA soon will face another test. Policy makers are considering whether to expand its responsibilities, giving the regulator oversight of tens of thousands of investment advisers, on top of the 600,000-plus brokers it already under its purview.

March 2nd, 2011|Educational Series|

Seven individuals charged by SEC in global warming scheme

The Securities and Exchange Commission (SEC) today charged seven individuals with perpetrating a fraudulent pump-and-dump scheme in the stock of a sham company that purported to provide products and services to fight global warming. The scheme resulted in more than $7 million in illicit profits from the sales of stock in CO2 Tech Ltd. at artificially inflated prices. The company, based in London, touted impressive business relationships and anti-global warming technology innovations, but was found to have no significant assets or operations.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of Florida, the scheme was enacted through Red Sea Management Ltd., a Costa Rican asset protection company that laundered millions of dollars in illicit trading proceeds out of the United States on behalf of its clients. Charged in the in the fraudulent pump-and-dump scheme were: Jonathan R. Curshen, a Florida resident who founded and led Red Sea, David C. Ricci and Ronny Morales Salazar of Costa Rica, who were Red Sea stock traders, Ariav “Eric” Weinbaum and Yitzchak Zigdon of Israel, who were Red Sea clients, Robert L. Weidenbaum, of Florida, who was a stock promoter and operator of CLX & Associates, and Michael S. Krome, a New York lawyer who allegedly wrote a fraudulent opinion letter. Without admitting or denying the allegations in the complaint, Ricci settled the SEC’s charges by agreeing to an injunction against future violations of these provisions and a penny stock bar.

In a related criminal action, charges brought by the Justice Department’s Criminal Division were unsealed today against Curshen, Krome, Salazar, Weidenbaum, Weinbaum, and Zigdon. The defendants were charged variously with conspiracy to commit securities, mail and wire fraud, violating securities regulation laws and obstruction of justice.

February 18th, 2011|Criminal Activity, Fraud, Green Technology|

Tyson Foods charged with violations of the Foreign Corrupt Practices Act

The Securities and Exchange Commission (SEC) today charged Tyson Foods Inc. with violating the Foreign Corrupt Practices Act (FCPA) by making illicit payments to two Mexican government veterinarians responsible for certifying its Mexican subsidiary’s chicken products for export sales.

The SEC alleged that Tyson de Mexico concealed the improper payments by putting two veterinarians’ wives on its payroll but they performed no work for the company. The spouses were later removed from the payroll and their payments were processed with invoices issued for “services.” Tyson de Mexico paid the veterinarians, who were responsible for certifying Tyson’s chicken products for export and served as official Mexican government veterinarians at Tyson facilities, a total of $100,311. It was not until two years after Tyson Foods officials first learned about the subsidiary’s illicit payments that its counsel instructed Tyson de Mexico to cease making the payments.

The SEC further charged that in connection with these improper payments, Tyson Foods failed to keep accurate books and records and failed to implement a system of effective internal controls to prevent salary payments to phantom employees and the payment of illicit invoices. The improper payments were recorded as legitimate expenses in Tyson de Mexico’s books and records, and included in Tyson de Mexico’s reported financial results for fiscal years 2004, 2005 and 2006. Tyson de Mexico’s financial results were, in turn, a component of Tyson Foods’ consolidated financial statements filed with the SEC for those years.

Without admitting or denying the SEC’s allegations, Tyson Foods consented to the entry of a final judgment ordering disgorgement plus pre-judgment interest of more than $1.2 million and permanently enjoining it from violating the anti-bribery, books and records, and internal controls provisions of the FCPA. The proposed settlement is subject to court approval.

In a related criminal action announced today, the Department of Justice (DOJ) charged Tyson Foods with conspiring to violate the FCPA and violating the FCPA. The DOJ and Tyson Foods agreed to resolve the charges by entering into a deferred prosecution agreement. Tyson Foods also agreed to pay a $4 million criminal penalty.

February 12th, 2011|Fraud|

Green-energy scams put portfolios in the red

The emerging green-energy market has created a horde of fraudsters. So many, in fact, that late last year, the Financial Industry Regulatory Authority (FINRA) warned about schemes that promise large gains from investments in companies that pitch alternative, renewable or waste-to-energy products. And in May of this year, the Securities & Exchange Commission (SEC) followed with its own alert about potential scams that exploit the Gulf oil spill and related cleanup efforts.

The green-energy get-rich-quick schemes are showing up in blog posts, e-mail, infomercials, Internet message boards, text messages, and Twitter. As with most investment scams, all promise unrealistic returns, such a 200 percent stock gain by a solar panel company, a one-in-a-million deal to get a “51 times” return on current stock value from a China wind-power enterprise, and a 500 percent one week stock gain by a hydrogen-based energy outfit.

Of course, the regulators are on the lookout for the scammers. In one recently filed case, the SEC charged that promoters of eco-friendly investment opportunities lured 300 investors into a $30 million Ponzi scheme, encouraging the participants to finance “green” initiatives of Mantria Corporation, including a purported “carbon negative” housing community in rural Tennessee and a “bio-char” charcoal substitute made from organic waste. Investors were promised returns ranging from 17 percent to “hundreds of percent” annually. But, according to the SEC’s complaint, Mantria did not generate any income from which such extraordinary returns could be paid.

As cautioned by the SEC, the oil spill in the Gulf of Mexico brought additional scam opportunities for cons promising financial gains from investments in companies that claim to be involved in the cleanup operations. In May and June 2010, the SEC suspended the trading in shares of ACT Clean Technologies Inc. of Huntington Beach, CA, and Green Energy Resources, Inc. of New York, NY, because, among other issues, questions arose about the accuracy and adequacy of the publicly disseminated information by the companies.

To dodge green-energy investment scams (and other frauds) investigate before investing! And:

Never rely solely on information contained in an unsolicited communication.
Find out who sent the investment recommendations; many companies and individuals that tout stocks are paid by the company being promoted.
Examine the fine print for any statements indicating payments in cash or in stock for issuing the report or message.
Find out where the stock trades. Most unsolicited recommendations involve stocks that do not meet the listing requirements of the major stock exchanges; they are usually quoted on the OTC Bulletin Board or in the Pink Sheets, which do not impose minimum qualitative standards. Many of the OTC or Pink Sheets stocks trade infrequently which can make shares difficult to sell. When these stocks do trade, they may fluctuate in price very rapidly.
Read the company’s SEC filings to verify information.
Exercise skepticism and be wary of any pitch that suggests immediate pay-offs, especially if the investment involves a start-up company or a product or service that is still in development.

October 19th, 2010|Educational Series, Green Technology|

Previous 234 Next