Stock Regent is running a contest. It is offering a $500 cash prize to the individual who buys, and then holds, the most shares of IBC between January 6, 2003 and January 17, 2003.
The contest seems like a transparent attempt to generate volume for IBC – but for whose benefit? Stock Regent admits that it “may receive compensation for the efforts in research, presentation, and dissemination of information on companies featured on our web site and within our newsletter reports.” In a lengthy disclaimer posted on its website, Stock Regent goes on to say that “[a]ll compensation can easily be found on the bottom of the the [sic] page for the companies being profiled.”
There is no compensation information concerning IBC at the bottom of the Stock Regent report on IBC, or anywhere else on the Stock Regent website. In fact, we did not find any compensation information at the end of any of the reports posted on the Stock Regent website. Does that mean Stock Regent has not been compensated for any of its promotional efforts? Is the $500 “prize” merely a whimsical gift from a philanthropic stock promoter? That does not seem likely.
So where is the benefit to Stock Regent? Has the promoter been compensated by IBC or some third party? Does Stock Regent or its owners hold a position in IBC shares that it is attempting to dump during the contest period? In other words, what is the promoter’s undisclosed agenda?
Investors who vie for that $500 prize should be aware that victory may come at a considerable cost. IBC is a start-up company with a questionable future, limited capital and minimal revenues. IBC shares may have the “potential” to double as Stock Regent boasts – but they also may decrease in value and become virtually worthless. The trip down is not all that far for a stock that trades for less than $2 per share.
There also can be no assurance that investors will even be able to recoup the purchase price. Such is the nature of over-the counter stocks. The investor buys the stock based upon an “ask” price – the price at which a market maker is prepared to sell stock to the public. Shares are subsequently sold at the “bid” price – the price at which market makers are prepared to buy stock from the public. Since the bid price is routinely lower than the ask price, a customer who wants to resell his or her shares immediately is likely to suffer a loss. This difference between the bid and ask prices - known as the “spread” - can be substantial.
In recent days, IBC stock has been trading at slightly under $2 per share. At one point on January 8, 2003, for example, the bid price for IBC shares was 1.8 cents, while the ask price was 2.1 cents. That means an investor could purchase 25,000 shares for $525, and sell them immediately for $450.
Investors were in even more trouble if they paid that 2.1 cents ask price, and then held the IBC shares as the Stock Regent contest rules required. By the time the market closed on January 9th, the bid price for IBC shares was 1.5 cents – down about 30% from that initial 2.1 cents purchase price.
The potential risks of an IBC investment are evident. Stock Regent’s agenda is not. Why is Stock Regent prepared to pay $500 to the investor who purchases the greatest number of IBC shares in a two week period? What will Stock Regent gain from creating a demand for IBC shares? Is this an effort to pump up the demand for IBC stock so that Stock Regent or some other undisclosed party can dump shares? Is IBC aware of this promotion? Is the Company complicit in this effort?
In other words, shouldn’t we assume that Stock Regent has a good deal more to gain than $500? Or is this promoter simply motivated by a generous spirit?
Let’s keep our eyes on this prize.
The contest seems like a transparent attempt to generate volume for IBC – but for whose benefit? Stock Regent admits that it “may receive compensation for the efforts in research, presentation, and dissemination of information on companies featured on our web site and within our newsletter reports.” In a lengthy disclaimer posted on its website, Stock Regent goes on to say that “[a]ll compensation can easily be found on the bottom of the the [sic] page for the companies being profiled.”
There is no compensation information concerning IBC at the bottom of the Stock Regent report on IBC, or anywhere else on the Stock Regent website. In fact, we did not find any compensation information at the end of any of the reports posted on the Stock Regent website. Does that mean Stock Regent has not been compensated for any of its promotional efforts? Is the $500 “prize” merely a whimsical gift from a philanthropic stock promoter? That does not seem likely.
So where is the benefit to Stock Regent? Has the promoter been compensated by IBC or some third party? Does Stock Regent or its owners hold a position in IBC shares that it is attempting to dump during the contest period? In other words, what is the promoter’s undisclosed agenda?
Investors who vie for that $500 prize should be aware that victory may come at a considerable cost. IBC is a start-up company with a questionable future, limited capital and minimal revenues. IBC shares may have the “potential” to double as Stock Regent boasts – but they also may decrease in value and become virtually worthless. The trip down is not all that far for a stock that trades for less than $2 per share.
There also can be no assurance that investors will even be able to recoup the purchase price. Such is the nature of over-the counter stocks. The investor buys the stock based upon an “ask” price – the price at which a market maker is prepared to sell stock to the public. Shares are subsequently sold at the “bid” price – the price at which market makers are prepared to buy stock from the public. Since the bid price is routinely lower than the ask price, a customer who wants to resell his or her shares immediately is likely to suffer a loss. This difference between the bid and ask prices - known as the “spread” - can be substantial.
In recent days, IBC stock has been trading at slightly under $2 per share. At one point on January 8, 2003, for example, the bid price for IBC shares was 1.8 cents, while the ask price was 2.1 cents. That means an investor could purchase 25,000 shares for $525, and sell them immediately for $450.
Investors were in even more trouble if they paid that 2.1 cents ask price, and then held the IBC shares as the Stock Regent contest rules required. By the time the market closed on January 9th, the bid price for IBC shares was 1.5 cents – down about 30% from that initial 2.1 cents purchase price.
The potential risks of an IBC investment are evident. Stock Regent’s agenda is not. Why is Stock Regent prepared to pay $500 to the investor who purchases the greatest number of IBC shares in a two week period? What will Stock Regent gain from creating a demand for IBC shares? Is this an effort to pump up the demand for IBC stock so that Stock Regent or some other undisclosed party can dump shares? Is IBC aware of this promotion? Is the Company complicit in this effort?
In other words, shouldn’t we assume that Stock Regent has a good deal more to gain than $500? Or is this promoter simply motivated by a generous spirit?
Let’s keep our eyes on this prize.
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