BIRD FLU SCAM ALERT>

Good Afternoon Everyone:

Bird Flu Stock Scam Could Be Hazardous To Your Financial Health The threat of bird flu is fueling stock scams touting large gains from companies that claim to be poised to capitalize on helping the world avoid a global pandemic. NASD is issuing this Alert to warn investors that fax and email investment scams may come your way trumpeting the promise of large gains for companies with products and services aimed at fighting bird flu. You can reach NASD at www.nasd.com.

One fax claimed its company "has the solution for tracking and containing the Bird Flu virus in turn preventing it from spreading." Citing the enormous cost of fighting avian flu, the fax stated the stock was "positioned to gain 250% or more." The fax went on to urge investors not to miss out on a stock that was "clearly missed by Wall Street."

Spotting Potential Bird Flu Investment Scams

Unsolicited faxes and spam about investments that exploit Bird Flu fears may include:

  • Price targets or predications of swift and exponential growth.
    The use of facts from respected news sources to bolster claims of a price run-up, for example that some percentage of the billions of dollars it will take to tackle a possible pandemic will contribute directly to a company's bottom line.
  • Mention of associations with, or actions by, federal and international government agencies that bolster a company's product or service. One fax mentioned that the Chinese Ministry of Science and Technology "had the authority to issue a mandatory directive" to require the use of technology similar to what the firm offered.
  • Mention of other "bird flu plays" that showed strong run-ups in price. On closer inspection these stocks often are not directly associated with bird flu response and may themselves be subject to attempts at price manipulation.
  • Statements about how much easier it is for low-priced stocks to skyrocket in value in comparison to higher-priced stocks.
  • Pressure to invest immediately

    • How to Avoid Getting Scammed

  • To avoid potential scams, make sure you get the information you need to make a wise investment choice.
  • Investigate before you invest. Never rely solely on information you receive in an unsolicited fax or email. It's easy for companies or their promoters to make glorified claims about new products, lucrative contracts, or the company's revenue, profits, or future stock price.
  • Find out who sent the message. Many companies and individuals that tout stock are corporate insiders or are paid to promote the stock. Look for statements (usually found in the fine print) that indicate cash payments or the receipt of stock for disseminating a report on the company.
  • Find out where the stock trades. Most unsolicited fax and spam recommendations involve stocks that can't meet the listing requirements of The Nasdaq Stock Market, the New York Stock Exchange, or other US stock exchanges. Instead, these stocks are usually quoted on the OTC Bulletin Board (OTCBB) or in the Pink Sheets. There are important differences between the OTCBB and the Pink Sheets and The Nasdaq Stock Market or a stock exchange:

    • There are no minimum quantitative standards that must be met by a company to have its securities quoted on the OTCBB or in the Pink Sheets.

    Many of the securities quoted on the OTCBB or in the Pink Sheets are infrequently traded and can move up or down in price quickly. This may make it difficult to sell your security at a later date.

    Read a company's SEC filings. Most public companies file reports with the SEC. Check the SEC's EDGAR database to find out whether the company files with the SEC. Read the reports and verify any information you have heard about the company. But remember the fact that a company that has registered its securities or has filed reports with the SEC doesn't mean that the company will be a good investment.

    Be alert to changes in the company's name and trading symbol, reported through SEC Form 8-K. Stock promoters often change a company's name and trading symbol in an apparent attempt to align it more closely with a current event or issue, such as bird flu.

    If you have any questions, please call the Department of Corporations SAIF Program

    Toll Free Hotline at 1-866-ASK-CORP (275-2677) or visit www.corp.ca.us.