SECURITIES: Pitch & Push, Unltd.

Almost everyone has dreamed of striking it rich with a two-bit stock. Thanks to that dream, dozens of sharp, fly-by-night promoters in Toronto have struck it rich peddling worthless penny stocks to Americans. Spurred by the boom in Canadian oil (TIME, Sept. 24), dealers have flooded the U.S. with literature on such “promising opportunities” as Hy-Flow Petroleum, Golden Fleece Mines and Uranium Explorations, Ltd., have been able to bilk U.S. suckers of some $50 million (swindlers’ estimate) a year. Sample come-on: “Our first stunned enthusiasm was fully warranted . . . This is the opportunity we had always dreamed about . . .”

Last week, the Securities & Exchange Commission, which has long tried to get Canada to put tighter restrictions on stock dealers, cut short some Canadian “opportunities.” To all U.S. stock exchanges it sent a list of 179 Canadian stocks which it “had reason to believe” were being illegally sold in the U.S., i.e., were not registered with SEC. But nobody thought that the list would put an end to Toronto’s “boiler-shop” operators; they deal with buyers direct, not through U.S. brokers.

High Pressure. The dealers operate from small offices along Toronto’s Bay Street. They buy sucker lists in the U.S., or compile them from phone books, then send out come-on literature to as many as 500,000 people at a time. The original promotion pieces are usually comparatively conservative in their claims. When some one bites, the high-pressure selling is done over the telephone. (“This offer is being made to only a limited few and you must decide before tomorrow.”)

The promoters buy stock from a company, which sometimes holds no more than a lease on undeveloped land or title to an abandoned mine, for 10¢ or 15¢ a share, sell it at 40¢ or 50¢ and pocket the difference. When a buyer wants to get out, he often finds no market for his stock.

When the promoters deal in a stock for which there is a market, they often jack up the price 100% or more when selling to U.S. customers. Example: promoters got thousands of copies of a Toronto Financial Post oil supplement, substituted a phony page to plug the “Moose Pasture Oil Company,” and mailed the copies to a list of potential U.S. suckers. For the stock, which was selling at 20¢ a share in Toronto, they asked $1.

Water Mine. A few years ago, when gold shares were falling and uranium was coming into the limelight, one mine changed its name from Samar Yellowknife Gold Mines Ltd. to Oak Ridge Uranium Mines Ltd. Neither gold nor uranium has yet been mined by this company; its main shaft is full of water.

The Ontario Securities Commission finally started to crack down a year ago by revoking the licenses of some promoters, and barring others from the mails. (The promoters got around that by using plain envelopes.) Bay Street’s sharpies, who used to be known as the “Dirty Sixty,” now number only a dingy 30. Before long, under a new U.S.-Canada pact now being drafted, SEC hopes to stamp out the racket entirely. The pact would permit the Justice Department to extradite defrauding stock pushers for trial in the U.S.