The fact is, they are not researchers, they don’t care if the company is even real.
The dirty secret they don’t want you to know?
They Are Paid To Pick That Stock!
The truth is one of two things (and you can verify this every time):
1) Someone paid them to promote the stock, so they could SELL when telling you to buy!
2) The website owns shares and are selling, profiting off the rise in price! You are buying THEIR shares!
-They are not producing real research, they are paid to “pump” the stock.
-They are paid in either cash or in shares of stock, or both.
-While telling you to buy now, they are selling everything they can and cashing in.
-If paid in cash, a large shareholder (possibly an executive) is selling and cashing out.
-Their “Disclaimer” (usually hidden) will reveal how much they were paid.
Why does this happen?
Simply put, many penny stocks do not trade much volume. Because of that, any increase in buying will push the price higher and allow sellers to cash out – at higher prices. It is worth it for the CEO or other large shareholder to pay a website $10,000 to pump their stock if it means they can sell hundreds of thousands of shares at much higher prices!
We see it time and time again. As long as the promoting website or newsletter discloses they are being paid, it’s technically legal. But they are skilled at hiding that and relying on the fact that most people will believe them without checking.
The newest scam has these same penny pumpers telling you they are watching the same promoters and you can profit off of the move when a promotion starts. They pretend to be traders, with a free site or penny stock newsletter, of course. They’re there to help you make money off of those darn pumpers! The fact is, they are the penny pick pumpers. It’s just another lie to get you to believe they’re working for you. Of course they are, your money!
A great example of a “pump and dump” scam is one we told our readers about in December and January. North Springs Resources (NSRS) was a classic.
At the time the campaign started, NSRS had reported a total of $16 (That’s just 16, as in $16.00) in cash on hand and property worth $59,990. $60,589 was reported in total assets. And yet, the stock had a market capitalization of $300 million.
Just before the start of the penny stock pump, the President, Harry Lappa filed for numerous stock splits so that he now owned a total of 500 million shares of NSRS.
The company then filed an 8-K stating they were working on a deal to acquire mineral rights to a property purported to have gold deposits. The only claim made at all was that the property was part of the “prestigious Mineral Ridge Mining District, Esmeralda County, Nevada”. That means nothing. It could be a parking lot and still be part of that district.
The company hired Carrillo Huettel, LLP as corporate counsel. The same firm that was ordered by a Federal judge to hand over its bank records as it was being accused of stock fraud. Good company, no?
AwesomePennyStocks.com was paid to promote the penny stock and did so through its affiliates effectively – as usual, by PRETENDING to look like they do penny stock pick research, and HIDING the fact they were being paid. Hundreds of emails and notices sent out to investors over and over. Of course, they never mentioned any of the news about the President, or the Corporate Counsel, none of that, just how exciting the land acquisition was! Of course, the company never intended to actually buy the land, just issue press releases that it “intended” to. If you believe that they really intended to, I have some lovely Florida swampland – no, make that “lake-front property” to sell you.
Now, the biggest scam of all that day was this: Fake bids being placed to buy shares of stock. Take a look at the Level II screen showing the massive bids of over 2.5 million shares showing. Those are there to keep the sellers thinking it might be going higher so they stay back while the President sells all he can. Those huge bids always stay below other bids so they are never actually buying shares. It’s all a show, a scam.
After more than a decade working on trading floors, I can tell you one fact: Market-Makers WOULD NEVER show 2,000,000 shares to buy even if they had an order. Never! Showing your large order would cause the price to rise, making you and your client have to pay higher prices. That is NEVER done. What we have here is fake bids being placed hoping to push the stock higher. Why? Because they are actually selling.
Here is a chart of the penny stock pick pump scheme. As you can see, when the emails and touting ended, the stock fell off the cliff. Guess who still owned shares when that happened? Guess who had already sold all of theirs?
There are very few penny stock pick websites our these like ours that are not paid to promote. We provide pure, honest research in small companies. If you decide to join a penny stock newsletter or penny stock website, please read their disclaimer first! Find out if the are paid or can be paid, and find out if they own or can own shares of the stock. If so, STAY AWAY! Many say they are not paid – but they own shares – that is the SAME as being paid!
Our only financial interest is in keeping our subscribers happy so they come back again and again. Doing it the honest way, our way, means making much less money. But we can sleep at night.
– See more at: http://falconstocks.com/freepennystockpicks.html#sthash.lgXLMd70.dpuf