World Investment Network Ltd. looks like a typical financial Web site. It shows email addresses, telephone and fax numbers, a Palo Alto office. It has on-line links to the Federal Reserve, J.P. Morgan, the New York Stock Exchange. An investor surfing
the site last year would have found an investment offer called "The Winsell $35K Lease $1 Million Program." This "non-risk" and "high-yield" program guaranteed an astounding 40 percent return every 15 days, according to the Web site. An initial
$35,000 stake would make $3 million in one year, the site claimed.
Suspecting fraud, the U.S. Securities and Exchange Commission launched an investigation last year into the World Investment Network and its 61-year-old president, Theodore O. Pollard. In May, Pollard was arrested for ignoring two SEC subpoenas.
Much of the evidence about share scams is for companies with small capitalisation. One big UK company has been hit quite hard and yet another saw an interesting rise in price after Internet gossip in mid 1999.
Managing comment and surprise events emerging via the Internet is important for investor relations managers and its not all from gossip on newsgroups and chat. Analysis now expose much more of their information on Web sites and the ability to collect and collate corporate information from the Internet is significant. At the beginning of 1999 there were no UK investment chat sites and the handful of newsgroups were uninspiring. In less than six months, the scene had changed entirely.
The ability to identify, sift, and assimilate financial information on the Internet is passing through a phase of remarkable development. In addition this capability allows investors to act very fast.