January 22, 2001    For Immediate Release

Internet not always a safe bet for accurate investor information

VANCOUVER -- The Internet offers investors a wide range of information but not all of it is true or accurate, warn Canada's securities regulators.

Web sites featuring chat rooms or bulletin boards devoted to investing and the stock market are increasingly being used to "pump up" thinly traded stocks, particularly companies listing on the Over-the-Counter Bulletin Boards.

"Buying stocks based on information posted in a chat room is like buying stocks based on a note tacked to a wall outside a grocery store," said Doug Hyndman, chair of the Canadian Securities Administrators, an umbrella organization of Canada’s 13 provincial and territorial securities regulators.

"The anonymous nature of the Internet allows people to easily exaggerate and lie. People can claim to be any sort of expert and there's no easy way to verify their claims."

At one time stock manipulation was limited to boiler rooms and shady stock promoters. Thanks to the Internet, that's no longer true.

Two recent Canadian incidents drive home this fact and show how market manipulation works.

In February, the BC Securities Commission investigated a fake posting on www.stockhouse.ca claiming two companies were prepared to merge. The posting included an alleged news release. Around the same time, stock in one of the companies - which had been trading for less than $1 - began to rise. All the claims turned out to be false, including the news release. The posting was eventually traced to Fanshawe College in London, Ontario. The investigation remains ongoing.

In October, the Commission des valeurs mobilieres du Quebec handed a former employee of investment dealer TD Evergreen a four-month suspension for his role in pumping a stock through an Internet chat room. The CVMQ found the man posted a message on a Quebec financial web site claiming a company would make a major announcement. The employee, who used a pseudonym, claimed he had just bought 1,000 shares in the company and he urged others to do likewise.

Internet postings pumping stocks have become even more widespread in the U.S. with the Securities and Exchange Commission considering charges against a New Jersey teen who allegedly made more than $800,000 (U.S.) manipulating penny stocks on the Internet.

U.S. regulators estimate that as many as half the messages in Internet chat rooms contain false information.

Investigate before you invest - tips for using the Internet

• Don't believe everything you read. Remember how easy it is to disguise your identity online. The scams usually involve projects in remote corners of the globe that can’t be easily checked out, or use endless technical jargon that can only be debunked by experts.
• Avoid claims of "inside information." Hot tips posted online are seldom, if ever, true. Remember, trading on inside information is illegal in Canada.
• Don't buy thinly traded, little known stocks based on information from a chat room. These types of securities are easily manipulated. Unlike blue chip stocks, the price of thinly traded, low priced shares can be moved significantly by relatively small trades.
• Don't assume that your online service provider polices its investment bulletin boards. Most don't. The volume of postings often swamp the ones that try. Often there is nothing to stop a con artist from posting one or 100 pitches for a swindle.
• Always take the time to do your own research using reputable information sources. Seek advice from a qualified, independent financial adviser.

For more information, please contact:

Nancy Stow Ontario Securities Commission (416) 593-8297	Dean Pelkey B.C. Securities Commission (604) 899-6880
Denis Dubé Commission des valeurs mobilières du Québec (514) 940-2163	Bonnie Beswick Alberta Securities Commission (403) 297-2664
Ainsley Cunningham Manitoba Securities Commission (204)-945-4733	Suzanne Ball New Brunswick Securities Administration Branch (506) 658-3117