Investment Scams: Bulletin Boards
AAA
  1. Investment Scams: Introduction
  2. Investment Scams: Different Types Of Scams
  3. Investment Scams: Bulletin Boards
  4. Investment Scams: Newsletters
  5. Investment Scams: Dealing With Investment Fraud
  6. Investment Scams: Conclusion

Investment Scams: Bulletin Boards


There are literally hundreds of investment boards where anyone can rant, rave, or post BS. Online bulletin boards (BBs) come in various forms, including newsgroups, usenet, or web-based boards. Some of the larger BBs, like those found on sites such as Raging Bull, Boards on Yahoo! Finance, and Silicon Investor, see thousands of messages posted on an hourly basis.

While there are many valid and useful posts on these boards, a large number of tips turn out to be bogus. Fraudsters most often use a pump and dump scheme on BBs by pretending to reveal inside information about big upcoming announcements, great new products, or lucrative contracts. The opposite can be done too. If fraudsters hold a short position in a company, they will try to spread negative rumors in the hope that investors will panic and push prices down.

Here's the tricky part about BBs: anonymity. You don't know for sure who you're dealing with and how credible they are. People claiming to be unbiased observers who've carefully researched a company may actually be company insiders, large shareholders, or paid promoters. A single person can easily create the illusion of widespread interest in a small, thinly-traded stock by posting a series of messages under various aliases.

In the aftermath of the dotcom bubble, bulletin boards experienced a dramatic drop in traffic. Thankfully, many investors realized they couldn't believe everything they read online. But that's not to say there is no valuable information on BBs. Before Enron went bankrupt, posts were made online that revealed many of the fraudulent practices taking place at the energy giant. Regrettably, at the same time, there were countless posts that were bullish on Enron. It's nearly impossible to sort out the valuable posts from the fake ones.

Investment Scams: Newsletters

  1. Investment Scams: Introduction
  2. Investment Scams: Different Types Of Scams
  3. Investment Scams: Bulletin Boards
  4. Investment Scams: Newsletters
  5. Investment Scams: Dealing With Investment Fraud
  6. Investment Scams: Conclusion
Related Tutorials
  1. No results found.
RELATED TERMS
  1. Organizational Behavior - OB

    Organizational Behavior (OB) is the study of the way people interact ...
  2. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  3. Enterprise Investment Scheme (EIS)

    A UK program that helps smaller, riskier companies to raise capital ...
  4. Volcker Rule

    The Volcker rule separates investment banking, private equity ...
  5. Environmental, Social And Governance (ESG) Criteria

    A set of standards for a company’s operations that socially ...
  6. Street Expectation

    The average estimate of a public company’s quarterly earnings ...
RELATED FAQS
  1. What are the key differences between pro forma statements and GAAP statements?

    The U.S. generally accepted accounting principles (GAAP) require companies to adhere to uniform reporting standards that ... Read Full Answer >>
  2. How do the C-suite members work together to make a successful company?

    Corporate managers, typically chosen by a board of directors in large organizations, are ultimately responsible to stakeholders ... Read Full Answer >>
  3. How does agency theory propose to deal with the agency problem?

    Agency theory highlights potential problems that may occur when agents and principals have different interests. Principals ... Read Full Answer >>
  4. What is the difference between a poison pill defense and a suicide pill defense?

    A poison pill defense and a suicide pill defense are two different defense strategies a company may use to thwart a hostile ... Read Full Answer >>
  5. What is the difference between a "flip-in" and "flip-over" poison pill?

    A poison pill is a defense tactic used by corporations to thwart hostile takeovers. The takeover candidate uses a poison ... Read Full Answer >>
  6. What's the difference between legal defalcation and illegal defalcation?

    Defalcation describes the failure of any one party to hand over or present funds that were entrusted to its care, but not ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!