First of all, I know; we can just ignore him. But that's not fun for discussion.
A couple week ago our next door neighbor, who we are friendly and on good terms with, came over during Sunday football. In a nutshell he "knows a guy" who is the "president" of a probiotics company. He says this guy is selling stock for $1 share, it will be worth $25/share next year, blah blah blah.
This week, he put a note in our mailbox inviting us over for a "session" where this guy will pitch the opportunity.
Stinks of a scam to me. and we have no interest. However, I don't know anything about privately-held companies and stock, and I'm curious if soliciting and making these absurd promises is stepping over a legal line. It almost smells like another Agape, Inc. Should I get info and report this guy to the FTC? Just ignore and walk away?
My plan, right now, is to just tell our neighbor I don't think it's a legitimate opportunity and leave it at that.
Message edited by: gludlow on 2009-11-07 16:35:53 CST
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Well, if you won't ignore him, just ask him this question:
Q: If a "business opportunity" is really going to net a 2,500% return in just one year, why aren't you keeping this private and buying every single share you can get your hands on? A: Because its a scam. There is no other reason.
Since it is a Private stock (ie private company), SEC, FTC, etc are not involved.
Tell him you are not interested. Tell him you are in debt to your eyeballs. Tell him to go away.
OR
If you want him to feel stupid, tell him you are interested, but you don't have the time to research and do the due diligence... and you need him to supply you with ALL of HIS DD in electronic format, so that you can review as you have time. Tell him you will give him 10% of YOUR profits if his DD shows you should invest. Wait for dumb look on his face and then call him an idiot and tell him to screw off!
Private stock does not mean the SEC is not involved. The general rule is that all stock must be registered unless there is an exemption. Ask what is the exemption from federal and state registration -- is the stock exempt or is an exempt transaction? There should be a private placement memorandum and some sort of prequalification of all the offerees. Securities laws regulate not only the sale of securities, but also offers for sale -- that is, the pitch to which you've been invited.
You also might want to ask if your neighbor is registered as a broker or dealer under state and federal law, because his activity might require him to be registered (or be subject to possible civil and criminal liability).
gludlow said:This week, he put a note in our mailbox inviting us over for a "session" where this guy will pitch the opportunity. Stock scam aside, is this the official mailbox where USPS mail is delivered? Did he put a stamp on the note? If not, that is a violation AFAIK.
polaris said:Walk into the meeting in a bathrobe and say loudly "Is this where the gay orgy is?".I had two 55yo guys yelling at each other during a deposition... and one of them stands up and screams at the other guy... "I'll make you S**K my D**K... again...!"
Since it is your neighbor and you are friends with him, why not ALERT him that this is most likely a scam where he will be losing money, and that you are not interested.
That way he has warning he is caught up in a scam, and if he decides to invest anyway, at least you warned him.
Not the first time either. About 15 years ago I was approached with same scam, some kind of fuel saving device... $1 per <share> too. They were even had disclaimer saying it's a very risky investment but I guess they were counting on people's greed... The disclaimer about the high risk probably save them from future lawsuit and FTC? As you seen with Agape, you just can't save the stupid.
Haven't heard anything about the device since.
Message edited by: ZenNUTS on 2009-11-07 20:10:27 CST
I'd probably go just to hear it, but that's me and I don't put much value on time. Probiotics seem like a less scientific product industry anyway. Might be interesting to hear the "miracle product" pitch, and see what kind of math they use to calculate projected returns.
edit: I'm not advocating considering investing btw, that's obviously a bad idea.
Message edited by: chronostiltzkin on 2009-11-07 20:32:07 CST
report him to the SEC if you really want to get rid of him. of course, you may wake up one day and notice your car is spraypainted black and green.
this sounds to me as if it is a private placement subject to exemption from SEC Registration. However, there are very strict regulations regarding the exemption - such as no general solicitation and a limited number of investors. lots more involved, but from what I can tell what he is doing is likely against SEC Regulations.
If you are on good terms with him, probably best to warn him and let him know that the pitch is likely a scam and against securities law. he can choose whether to listen to you or not, but it should at least get him to stop bothering you.
I would go with a list of complex business and science questions like,
"What is this company going to do to sustain a competitive business advantage?" "What are the barriers to entry for rivals?" "What is the 95% confidence interval that this product is effective? Show the math." "Show me the marketing data that demonstrates the projected revenue based on our key demographics." "How do the bacteria in the probiotic solution survive the acidic environment of the stomach?" "Clinical trials have shown that probiotic therapy is contraindicated for patients with acute pancreatitis, resulting in death. How will we monitor patients for development of pancreatitis?"
This ia s guaranteed way to get your friend to stop bothering you and have fun being a jackass in the process. I do this frequently with religious friends who invite me to church. I then ask a series of evolution-based questions and tease the christians about their flawed circular logic.
Message edited by: tripleB on 2009-11-07 21:20:37 CST
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