Investor Relations Scammers - IR Con-men - Pump And Dump Chumps - A Must Read For New Public Companies
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If you have a public or pre public micro cap company you've obviously investigated or experienced the staggering swings in daily trading volume. There are numerous causes for these swings such as: federal legislative announcements that affect your industry, not living up to the previous quarters financial projections and even something as simple as not keeping the public informed of what's going on with your company which can cause one of your big stock holders to sell their shares causing a ripple effect throughout your shareholder base.
When your company finds itself in a situation where there is minimal trading volume or an overall dumping of shares the board and 'C' level executives will meet to put a strategy together.
Typically this strategy will include a number of 'reactionary' elements with a short term rebound and drop as opposed to throughout strategies that will have a long term inducement of growth stimulation and perpetuation. When they decide to step up and take a more aggressive approach the company will contract with a micro-cap promotional specialist that will put a combination of investor relations strategies in place that will facilitate a volume trading rebound short term and a series of information distribution solutions over the long term such as press release, 'C' level expert panel participation on TV, Radio, podcast, blogs, industry journal interviews etc.
Sometimes the company is in such a rush to save their company that they will open conversations with consultants who represent the underbelly of the IR beast. It's almost impossible to know the good guys from the bad guys when a company is seeking the expertise of a professional stock promotion firm for the first time. There are several important factors to keep in mind when evaluating IR consultants for the ultra fickle and scummy world of stock promotion. First, don't try to sound like you have all the answers.
Do more listening than talking during the first few meetings. Do these meetings in person if possible. Geography is important as most of the real players in this genre are in the north east and the IR firms that have been run out of the north east typically congregate in Florida. It's actually kind of funny how de-licensed brokers flee the boarders of Manhattan and end up in Tampa or Boca and they begin to sell investor relations services. Now I'm not saying that all the IR firms in Florida are scammers, there are actually some brilliant strategist that I've used from that region but the above is just an industry insider joke.
When meeting with these consultants look for certain body language, facial expressions when they respond to questions and voice tone and intonation. An IR strategist that is too relaxed is usually dirty. If they aren't drilling you with 101 questions about your corporate structure, future announcements, executive pedigree and other ammo for a real campaign then they are most likely pump and dump artists or all together worthless and for the love of god get proof of their track record by obtaining stock symbols for companies they've worked with in the past six months and get the dates that they've worked with the companies, then go back on your brokerage account and use the graph system to track the stock performance.
A nice pump with a gradual increase and stabilization is the trend you want. Here is a quick cautionary tale of the prototypical scumbag, con artist that you want to stay away from. My office is strategically placed in Philadelphia area of Pennsylvania because we do various types of consulting so I need to be within a reasonable proximity to Washington DC and Manhattan. When I am working on board of directors formation or 'C' level recruitment for pre IPO companies I will typically just stay in NYC for a week or two and work with the brokers and consultants involved in the transaction via back to back meetings so that we can get the job done in a reasonable time. This is also when I will meet up with new contacts for additional services my clients need, Investor Relations being one of them.
I got a call from this older gentleman who saw my profile on LinkedIn and he introduced himself as an IR strategist with 25 years in the business with an incredible ability to help selling shareholders sell their stock into the marketplace without damaging the company or the stock price and that he could make it happen fast because of his vast and up-to-date database of accredited stock investors. Obviously if this was true I had 2 or 3 clients that could use that service immediately so I agreed to meet him. Well, hmm, how do I explain this? When we met at my hotel he was around 80 years old, had a fake bake tan, disco style shirt unbuttoned to his bellybutton and enough fake gold to make Mr. 'T' blush. We went into this Italian restaurant attached to my hotel and we spoke, I got water, he ordered a meal and I got stuck with the check. Yes, it was as pathetic as it sounds.
Even though this ancient relic/disco champion looked and sounded like a Doobie Brother with lock jaw and a serious vitamin D deficiency I wanted to remain objective and gave him the benefit of the doubt and let him sit in on a meeting later that week with a group of investors as I wanted to see if I was missing something and that instead of a mashed potato mouth idiot he could possibly be an eccentric genius.
After the meeting it was universally agreed that this Doobie Brother was an idiot and we just passed over him. Now here is the kicker. This goofy joker wanted to invoice us over $8,000 for his 'con' consultation. To this day I get emails from this chump but hey, live and learn. Investigate every ounce of minutia about an IR group before signing a contract. Never sign anything until you're absolutely comfortable. Use shares as collateral for payment when you can and negotiate like the dickens if you're paying in cash and that was Investor Relations 101.
Article Source: Articlelogy.com
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