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Penny Stocks and PennyMarkets.com
The following suggestions may be of help to anyone who decides to play the high-risk penny stock game:
No matter what the salesperson tells you, get a prospectus and read it. The prospectus is the document containing full disclosure of all the facts about the offering. It must be filed with the Pennsylvania Securities Commission. (In a private deal the document is sometimes called an offering circular or offering memorandum and contains much the same information as in a prospectus.) Anything a salesperson says that contradicts disclosures in the prospectus should be a red flag, warning one off the offer. Following are some sections of the prospectus that disclose risks involved in a penny stock offering:
The fraudulent penny stock broker has a "boiler room", a bank of telephones manned by high pressure salespersons who tout stocks with outrageous promises. Beware of claims that the stock will double soon, and demands that you make an on-the-spot decision and pay immediately. Suggestions that the broker has inside information or that manipulative techniques are being used to raise the stock's price should be viewed very suspiciously. They are danger signs of the penny stock game in which many buyers are the losers.
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