ALABAMA
SECURITIES COMMISSION
770 WASHINGTON AVE, SUITE 570
MONTGOMERY, ALABAMA 36130-4700
TELEPHONE (334) 242-2984
1-800-222-1253
FAX (334) 242-0240
E-MAIL asc@asc.state.al.us
FOR IMMEDIATE RELEASE:
ASC WARNS PRE-IPO INVESTORS
MONTGOMERY, ALABAMA (June 28, 2001) Joseph P. Borg,
Director of the Alabama Securities Commission, announced today that a Cease and
Desist Order has been issued to 8 companies and agents prohibiting them from
further offers or sales of any security into, within, or from the state of
Alabama. Mr. Borg said, "This is
part of a continuing effort to protect the citizens of Alabama from becoming
victims of securities fraud. Recently a
company called ICON Trading, Inc. out of California, illegally sold a
Pre-Initial Public Offering (Pre-IPO) in a company whose stock was to go public
in a few months. The cost of the stock
was $1.60 per share and it was “guaranteed” to go up to $2.50 a share at the
opening price. Needless to say, there
are no guarantees in the stock market and the investor from Alabama lost over
$5,000. The consumers best protection
is to thoroughly research and check out any investment opportunity before
buying."
The following companies/agents were issued a Cease and
Desist Order from the State of Alabama:
First Americap Corporation, Capital Relations Group, LLC., Stephen H.
Thomas, Robert D. Williams, and Tiji Thomas all from Houston, TX; Cyrus
Industries, Inc. formerly known as ICON Trading, Inc. from Huntington Beach,
CA; Raece B. Richardson from Los Angeles, CA., and ByteAudio.com from Pompano,
FL.
In this type of scam Alabamian's are contacted by
telephone, email, or mail and offered a fantastic investment opportunity. This opportunity, which is referred to as a
Pre-IPO, involves
purchasing stock in a company prior to the company making its initial public
offering. A company goes public when it
offers its stock to the public through a stock exchange like the NYSE or
NASDAQ. Sometimes Pre-IPO stocks are
referred to as penny stocks because of their low initial price.
Penny stocks by legal
definition are under $5 per share, but can include many micro-cap stocks in the
$7-$15 range. During the past few years
when technology stocks were hot, a few lucky people made big money in
Pre-IPOs. Unfortunately, the Pre-IPO
fad also created an opportunity for criminals to set up bogus companies and
scams.
Before investing in Pre-IPOs
you will want to personally research the company to decide if you feel
comfortable with this type of high-risk investment. Next, check out your securities firm and its agent with the
Alabama Securities Commission (ASC).
The ASC can provide you with the following information: is a securities professional or a firm licensed
to conduct business in Alabama; information on individual employment and
disciplinary history; are the securities for sale properly registered or exempt
from registration in Alabama. It is
illegal to sell unregistered securities (unless exempt) and If you buy unregistered
securities, you may have a difficult time obtaining current and reliable
information about the company.
Unregistered securities will be difficult to sell or may be categorized
as restricted by the Securities Exchange Commission (SEC). The SEC could prohibit the sale of the
securities for a period of time and there may not be a readily available market
for the sale of the shares.
There is a vast amount of free information on saving,
investing and fraud prevention on the internet. An excellent starting point is the NASAA website (http://www.nasaa.org/);
take the main menu to Investor Education and enter into the Investor Tips
section. Numerous articles are provided
at this website for free or you may call or write the Alabama Securities
Commission, Education and Public Affairs Manager.
To contact the Alabama Securities Commission call
1-800-222-1253, or write: Alabama
Securities Commission, 770 Washington Ave., Suite 570, Montgomery, Alabama
36130-4700, or email asc@asc.state.al.us.
###
FOR
ADDITIONAL INFORMATION CONTACT:
Joseph P. Borg Daniel G. Lord
Director Education and Public Affairs Manager