Information superhighway doesn't reach the SFC
OVER the weekend we've been reading an interesting article about the use of the Internet computer network for share-ramping operations.
It's a simple business. First, buy into an illiquid, thinly traded stock. The article in question, in New Scientist of all places, detailed the example of Interlock Consolidated Enterprises, listed on the Alberta stock exchange.
Electronic messages were posted on the Internet saying it had won a big contract in Russia. Usually, these messages aren't posted as announcements, but are inserted subtly into an ongoing discussion intended to trick ''lurkers'' who spend their time reading other people's discussions.
These mugs pile into the stock, sending it through the roof, at which point the original participants sell out.
In the case of Interlock, the price at the beginning of the year was 12 Canadian cents, and it peaked at C$1.30 in the middle of March before slithering to around 70 cents.
New Scientist quoted a securities official as saying individual investors had losses of up to US$20,000.
Usually, these share-ramping operations are quite expensive affairs, with bogus newsletters followed by calls from ''financial consultants'' who have to be based outside Hong Kong to escape the medium-sized arm of the law.
The Global Information Superhighway is much cheaper and simpler.
And the folks at the SFC, who flick through every newspaper every day to find evidence of naughty business, don't have the time to scan computer networks as well.
We rang one of their brightest and smartest managers about this and he said ''Errr, what's the Internet?'' Know-how OCEAN Information Holdings, the computer company, has a little surprise in the small print of its newly printed annual report.
The computer-maker has bought a 30 per cent stake in PW Asia, the brokerage which is, or was, 50 per cent owned by Yip San-fuk, son of former Guangdong province governor Ye Xuanping, and which was fined for using unlicensed dealers' representatives about four weeks ago.
Ocean already owns some strange assets in the shape of two units in the Asian Games Village in Beijing and is also forging ahead with a couple of property projects.
This stuff about technology firms splashing into financial services is scary.
Imagine if the person who was destined to discover the secret of fire decided that trading different-coloured sea shells was more profitable than experimenting rubbing sticks together.
We'd all still be living in caves.
Hot seat THE price of seats on the stock exchange has bounced off the $10 million mark, and there's every chance it'll go through some time this year, we hear.
About two months ago one went for $9.7 million. Two years ago a smart investor could have grabbed one for less than $1 million, and even 15 months ago they were going for $2 million.
The price has gone up faster than all but the dodgiest shares.
After the seat went for $9.7 million the price slithered down a bit to around $8 million, but interest is picking up again and it's only a matter of time before $10 million is passed, we've heard.
There's only a limited number of seats, each of which entitles its owner, literally, to a seat on the big trading floor, on to which he glues a trader in a red jacket to transact his business.
When each load of foreign brokers gets off the plane they've got to prise one out of the hands of some elderly broker, or they can't do business.
There's a minor risk in speculating in seats though. The exchange is working towards getting rid of the trading floor altogether.
Once the physical limit for seats is ended, how long before they start to create some more? Hand to mouth HAS anyone noticed a certain lack of fizz about the Government's attempt to convince everyone of the benefits of its pension proposals - the proposals that would take cash from amahs to pay Li Ka-shing $2,300 a month? About three weeks ago, there was a big meeting of government public relations to try and work out a strategy.
At the end of it, the 30 or 40 people assembled were asked, as a matter of interest, how many of them personally supported the package.
Not one hand went up.