Penny stock offerings plunge.

Florida Trend; 8/1/1992

You say you missed out on that hot offering of 30 million shares of stock in Fort Lauderdale-based New Age Industries back in 1987, each share bargain-basement priced at a mere penny? And you didn't buy into a similarly priced offering that same year for stock in Boca Raton-based International Patents, either?

Good for you. Both companies have since disappeared, and the number of companies in Florida that are going public through penny stock offerings has tailed off over the past five years, from 16 in 1987 to one in 1991 to zero through the first half of 1992.

Why the drop-off? Credit the Florida Penny Stock Task Force, made up of the Florida Division of Securities, the Miami office of the Securities & Exchange Commission and the Federal Bureau of Investigation. Since July 1988, the group has met every quarter in an effort to crack down on Florida's notorious penny stock activity.

"I guess we were successful," says Charles Harper, who heads the Miami SEC office. Harper credits the success to a multipronged effort: The task force examined every penny stock broker-dealer in Florida, required them to determine the suitability of a penny stock investment for clients and made a public push to warn investors of the risks involved.

Has this crackdown hurt the ability of small, legitimate companies to raise capital? Harper doesn't think so. "Hopefully," he says, "by driving the fraud out of the market, we will make it easier for investors to have the confidence return to this area."

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