7 Red Flags For Investors

Readers often ask how they can spot a potential stock scam.  Are there warning signs that signal investors to proceed with caution – or not at all?  The answer, of course, is that there are red flags that should trigger instant skepticism.

There are just so many ways to fool the public, and while investment schemes are constantly changing, the latest scams are often variations on older themes.

Still, stock schemes continue to thrive and their victims lose millions of dollars.  And while regulators eventually catch up with some of the schemers, it is often years after the fraud has concluded, and long after the profits and profiteers have disappeared.

Investors need to act as their own first line of defense, and avoid dubious investments in the first place.  How can they do that?  There are “red flags” flying that signal the possibility of a stock scam.  Here is our short list - seven warning signs that scream out, “Stay Away!”:

• Unsolicited Spam E-mails
• The Absence of Public Information
• Foreign Relations
• Uh, Oh Canada
• Opportunism.
• Shares AplentyPromoters.

Investors should pay attention to these warning signs.  There is no guaranteed way to avoid investment schemes (unless you don’t invest), but everyone can reduce his or her exposure to potential losses by remaining alert and informed.  Remember, there is no substitute for information.  Before you invest, investigate.

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GREM USA - The GREM Truth

What does an unsuccessful penny stock company do once it has implemented a reverse stock-split – its fifth since 2002 – once again shrinking the holdings of its current shareholders?

If the Company is GREM USA (OTCBB: GRUS) it sets the stage to issue new shares.  In February 2007, GREM completed a 1 for 4 reverse stock-split.  Then, on April 9, 2007, GREM filed a Form S-8 Registration Statement, registering 560 million shares for its GREM USA Stock Compensation Plan.”  The newly registered shares can now be issued to – and sold by – consultants, advisors, officers, directors and employees of the Company.

GREM, which says it intends to design and sell guitars – but has yet to strike a profitable note – has been down this road before.  On February 16, 2006, for example, the Company filed a Form S-8 registering 700 million shares of its common stock to be handed out to this same group.  Some of those shares – 65 million – went to Gregory Reszel, a consultant who has been retained to design guitars for the Company.  But far more stock – 490 million shares – was issued to Steven Carnes, a consultant who was engaged to provide vague “management and merger and acquisition services.  As best we can determine, however, GREM’s “management” consists of its sole officer and director, Edward Miers, and the Company has not engaged in any meaningful mergers or acquisitions.  StockPatrol.com readers will recognize Steven Carnes as a penny stock pro who has been involved with another pair of over-hyped, non-performing companies, Signature Leisure and Renovo Holdings.

Which officers, directors and consultants will be receiving the newly registered 560 million shares of GEM common stock?  Miers remains the Company’s sole officer and director.  Consultants?  Stay tuned.