Raleigh, NC -- (SBWIRE) -- 02/08/2012 -- Innocent people are getting tricked out of their well-intended investment dollars, and penny stock promoters are easily sidestepping legal requirements to "legitimately" steal your money by misrepresenting the strength of worthless penny stocks.

You may have seen them in your e-mail, a free penny stock newsletter, or chat room - the next "hot" penny stocks that are going to make everyone rich. Is there anything to these penny stocks with promises of revolutionizing the world, and multiplying in price in the process?

No, there isn't, according to Peter Leeds, author of "Invest in Penny Stocks," editor of the world famous Peter Leeds penny stocks newsletter, and leading speaker on speculative penny stock investments.

"Penny stocks being used for pump and dumps are chosen because they are almost worthless to begin with," explains Leeds. "It is easy to manipulate the prices of their shares by misrepresenting that penny stocks' prospects. The more they lie to you, the more unsuspecting investors buy in, and the more money these penny stock pump and dump artists in make off of worthless penny stocks."

According to the Securities and Exchange Commission (S.E.C.), a pump and dump generally starts with a promoter purchasing a huge amount of shares in some penny stock on it's last legs, for a very low price. Then they will pepper the Internet with e-mails, and free newsletters about the penny stock in question. As this generates more buying from unsuspecting investors, those penny stocks begin to climb. That is... until the penny stock pump and dump artists have enough profits, and they move on to their next worthless penny stock. At that point without ongoing efforts of the promoter, which could be a matter of days or months later, the penny stock sees it's shares collapse, taking all investors with it.

Leeds states that there are a lot of great penny stocks and penny stock companies out there. The ones being targeted by promoters, however, are penny stocks in terrible companies which are nearly worthless, and therefore more easily driven up in price from such lows.

When asked how these penny stock promoters get away with it, Leeds explains that the S.E.C. requirements about penny stock promotion aren't strict enough, nor are they appropriately policed. He asserts that these promoters should remember that, "just because they aren't getting stopped doesn't mean that it's right."

"Penny stock promoters can drive a 1 cent penny stock up to 20 cents, but when they decide, the price crashes back down," says Leeds. "And it was always worthless, even at it's price peak."

In many cases, what looks like a legitimate penny stock report is actually a paid advertisement, which can be seen in their lengthy, fine-print disclaimers.

"Some people forget their ethics and try to ride along with the penny stock pump," states Leeds, "They need to remember that every dollar they made riding along with the penny stock promotion is a dollar taken out of another person's pocket - usually a naive but trusting penny stock investor, or an old lady who is desperate in this economy."

"We have never taken a single penny in compensation to give our review of any penny stock, and we only talk about the best penny stocks that have solid fundamental strength, with huge, realistic upside. We feature the great 5% of penny stocks that our analysis says will outperform other penny stocks, because they are excellent businesses. The penny stocks you are hearing about for free, those penny stocks being pumped and promoted, are generally worthless companies that will end up where they started, which is near zero."

About Peter Leeds
Author of "Invest in Penny Stocks," publisher of the world famous Peter Leeds penny stock newsletter, and leading speaker on penny stocks, Peter Leeds has spent over 14 years actively in the industry. His full team monitors and manages his penny stock newsletter. He also leads panels at the Money Show and the Arch Investment Conferences about investing in penny stocks and speculative equities.

About Peter Leeds Penny Stocks Newsletter
Having sold over 30,000 subscriptions, the Peter Leeds Penny Stocks newsletter at htp://pennystocks.com is read on six continents the world over. With 100% unbiased reporting, no compensation or fees from the penny stocks they review to buy, and full company reports, it is the leading penny stock newsletter worldwide. All subscribers gain instant access to daily updates on past penny stock picks, buy and sell prices for all penny stocks reviewed, and over 40 bonus reports.