Deutsche Börse to shut down scam-riddled First Quotation Board exchange

Unbeknownst to many of my readers, Germany has for years had a big stock manipulation / penny stock scam industry, probably larger than any other country’s save the United States’ OTCBB / Pinksheets and the now closed Vancouver Exchange in Canada (most Canadian promoters now promote stocks on the OTCBB or pinksheets now, although there is some pump & dump activity on the Toronto Stock Exchange Venture Exchange).

Perhaps the most infamous of currently active stock promoters of American stocks, Awesomepennystocks.com (aka Centro Azteca S.A.) up until recently had a German version of its website, Awesomepennystocks.com/de/ (the website now just shows up in English). The same stock promoter also ran the now-defunct German-language pump websites LoveforStocks.com (see a screenshot of how it looked on Feb 7, 2011 from Archive.org), AwesomePennystocks.de, and SmallCapSpecialists.com (see a screenshot of how it looked on March 1, 2011 from Archive.org). These websites were hosted on the same server that hosts other Awesomepennystocks pump websites. See the screenshot below from the wonderful website ReverseInternet.com.

Here is the iContact email list edit subscription / unsubscribe page from the emails I received from Awesomepennystocks.de:


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Below is a screen shot of the Awesomepennystocks.de welcome email:


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And here is a screenshot of the one stock promotion email I received from Awesomepennystocks.de:


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Perhaps the reason why Awesomepennystocks.com has shut down their German websites is that Deutsche Börse is shutting down its least-regulated stock exchange, the First Quotation Board, which was rife with stock manipulation and pump and dump scams.

Established in 2008, the First Quotation Board was designed to make it easier for companies to trade publicly, and there was little regulatory oversight: companies were not required to file a prospectus or even to have any revenues (sounds a lot like the Pink Sheets here in the USA). Last year, the German financial regulator, BaFin, conducted 166 investigations, the majority of which involved companies trading on the First Quotation Board.

Michael Zollweg, the head of the Frankfurt Exchange’s trading oversight board, had this to say:

“By combining tips from investors who felt scammed with suspicious patterns in order books, we got a hint that much activity on the First Quotation Board was based on pump-and-dump strategies, like it can happen with pink sheets in the United States”

The regulatory crackdown on the various manipulative schemes failed to stop them, so Deutsche Börse decided to completely shut down the First Quotation Board and require companies to either uplist to the Entry Standard Board, which has significantly more requirements, or delist entirely.

For more details, see this New York Times Dealbook article.

Perhaps someday regulators in the USA will crack down on stock manipulation / fraud / pump and dumps, but that day will not come soon. The Pink Sheets and OTCBB will not be shut down by their owner because their owner (OTC Markets Group Inc.) does not also own more prestigious stock exchanges. Those of us who deplore stock fraud can only hope that OTC Markets Group Inc. decides that it would benefit by reducing the rampant manipulation of OTCBB and Pink Sheets stocks. But just like with the First Quotation Board, it is stock manipulation and pump and dumps that bring much of the volume to stocks traded on the OTCBB and Pink Sheets, so it is likely not in OTC Markets Group Inc.’s financial interest to eliminate them.

Disclaimer: I have no positions in any stocks mentioned and no relationship with any people mentioned. I trade pump and dumps and OTCBB / Pinksheets stocks. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

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