The Internet investment newsletter gave the business startup a glowing promotion, so Galen O'Kane pumped in a hefty chunk of his savings. Like traditional investment scams, cyberspace scams usually involve small-company stocks that are relatively cheap, risky and thinly traded.
Some companies portray themselves as Internet businesses.
Promoters do not have to give the customer the hard sell over the telephone in unsolicited calls. Because the Internet is everywhere, unscrupulous stock promoters anywhere in the world can cloak themselves in anonymity and lure investors across America. That means real headaches for international, federal and state securities regulators, who must pursue fraud, coordinate their efforts and educate investors about the risks, according to a new report by congressional investigators. Also scheduled to testify at the hearing was Thomas Gardner, a founder of The Motley Fool, a respected investment information service. Gardner believes the key factor allowing Internet securities fraud to flourish is investor ignorance.