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RealTime IT News

Speaking of Stinky Stocks

Like an episode straight outta the Sopranos, the wiseguy capo's hot-headed crew were up to no good, running a penny stock pump-n-dump out of a NY-area boiler room operation. Once Manhattan's crackerjack District Attorney Mary Jo "book 'em" White burst onto the scene, it was curtains for the crooks.

But like a classic cops and robbers flick, someone turned up in the line-up that raised a few eyebrows. Many retail investors and day traders were shocked to find FinancialWeb.com's familiar mug involved in Operation Uptick, the biggest stock-fraud bust in US history. For nearly half a decade, the securities scheme involved the big Apple's five mob families scamming old ladies in walkers.

Where the heck does the author of the once-wildly popular Stock Detective fit in here? And why's FinancialWeb's stock price look like it went sideways through a wood chipper? For those keeping score, the company's shares are in freefall since mobster indictments got handed down.

One week ago today, FinancialWeb sat handsomely perched at $8 a pop, before plunging to a buck and a half yesterday, down more than 80%. A meltdown like that hasn't been seen since fellow penny stock Starnet Communications had the Canadian Mounties kicking in their gambling bunker back in the summer of last year.

As it turns out, FinancialWeb was among 35 penny stocks that were allegedly pumped and dumped by brokers with ties to the underworld according to Feds. In an attempt to stop the bleeding, newly appointed company execs scrambled to issue a press release denying any involvement. But that didn't explain why Glenn Laken, an FWEB consultant and the company's largest shareholder, got caught in the Fed's dragnet.

Laken owns a whopping 15% stake in the company and is charged with trying to drive up FinancialWeb's stock price using bribery, newsletters, and fraudulent information posted on the Net. For a company who's made a name for itself by gleefully exposing suspect "Stinky Stocks," the news hits home.

It's too early to tell if current or former management had any involvement, but one thing's for certain, FinancialWeb is already a stinky stock for more reasons than one. Former ringleader Kevin Lichtman was unceremoniously bounced from the company late last year before hastily dumping a million dollars worth of insider shares. But the real stench began with FinancialWeb's delayed release of its annual report.

The company's new CFO and accountants stalled the SEC for nearly eight weeks before releasing one of the worst set of financials investors have ever laid eyes on June 5th. Last year, FinancialWeb lost a staggering $54 million while collecting a laughable $450,000. For those keeping score, that's nearly an $11 per share loss. And investors wasted no time running for the exits holding their collective noses.

The Stock Detective Web property has since been collecting mothballs in recent months; and that's a good thing, since full disclosure revealed the company has been calling the kettle black all along. The site proudly boasts, "The best of the worst, brought to you by Stock Detective. Find out who's scamming who."

Oh, the irony.

Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.

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