Just when you thought that nasty publicity had scared them away, here come the bad boys of the stock-tender business again.

They're generally elusive characters who try to get individual investors to sell their shares for less than market value through so-called minitender offers, or offers for less than 5% of a company's outstanding stock. The bidders don't seek bigger stakes because then they would run afoul of federal laws requiring them to disclose detailed information about themselves and their offer.

The deals are far removed from traditional tender offers, under which big investors or companies bid for stock at a premium to the market value to gain control of a company. Most of the people behind minitenders are fringe players, hoping to snare a few shares that can be quickly sold at a profit.

Some of the minitender bidders, after being around for more than a year, were driven away this summer by

Securities and Exchange Commission

warnings about abuses. (Some of the bidders didn't pay when unsuspecting shareholders tendered. Imagine that!)

A Comeback

Now, the practice seems to be picking up again, perhaps to take advantage of investor unease over sliding stock prices. A recent string of deals targeted the holders of such major companies as

AT&T

(T) - Get Report

,

Eastman Kodak

(EK)

and

Minnesota Mining & Manufacturing

(MMM) - Get Report

, as well as smaller names like

Molecular Biosystems

(MBIO) - Get Report

and

General Magic

(GMGC)

.

The 3M case is an example of how bidders try to catch the unwary. In an offer last month, a particularly active Phoenix bidder called

TST Recommends

Vector Enterprises

sought to buy up to 1% of the company's stock for $84 a share. Vector was hoping that investors would be too naive to notice that 3M's stock was trading at around $93 at the time.

"The problem is that people hear the term tender offer and they immediately assume it's above market value," says Janet Watson, treasurer of

Empire District Electric

(EDE)

, a central U.S. utility whose shareholders were targeted by Vector earlier this year. "It's basically a scam."

It's hard to determine the success of the bids. Some companies say that unless shareholders alert them, they don't hear of the offers, which are generally delivered first to brokers, bank trust departments and other custodians. Another reason companies may not learn what's going on is that even though brokers and other custodial operations are obligated as fiduciaries to refer the offers to investors, some regard the bids as a nuisance and throw them away.

Companies that do hear of the offers, like Empire District Electric, sometimes alert their shareholders. But they still can't determine how many people actually relinquish their holdings.

Keeping Watch

The SEC says it's keeping a close eye on minitenders for signs that bidders are living up to tender-offer rules. The rules, spelled out on the agency's

Web site, require that bidders, among other things, state clearly that the offer is for less than market value, that the bid could be reduced and that a decision to tender shares could be irrevocable.

The SEC brought a case last year against another Phoenix bidder,

IG Holdings

, which allegedly didn't tell investors that some of its offers were discounted. Without admitting or denying guilt, IG Holdings agreed to abide by SEC rules in the future.

Dennis Garris, chief of SEC's Office of Mergers and Acquisitions, thinks agency efforts to educate both bidders and investors about minitenders has paid off in improved conduct. But, he says, the SEC is "waiting and seeing and looking at some deals."

"We are very interested in making sure that what the commission has said ... is taken seriously," he says.

Following the Law

Vector Enterprises, for one, says it is being diligent in seeing that shareholders are fully informed of a below-market offer and of their rights if they tender. "We follow literally every letter of the law," says President Russell Stamm.

Stamm, a former travel agency owner, is a self-described latecomer to minitenders who says that Vector hasn't made any big scores. In fact, he says, he's lost money recently because share prices dropped after he landed some stock.

"The primary idea is to solicit remnant shares," he says. "Sometimes we get them, but I wouldn't say it's been tremendously successful."

Stamm disputes portrayals of Vector as a predator. He says that if brokers and other intermediaries don't think the deal is a good one, they should point it out to shareholders.

"I don't think this is fraudulent activity," he says, adding that he pulled out of one deal involving 2,800 shares when it became clear that the shareholder hadn't understood his action.

Stamm says he doesn't bank much on minitenders anyway. Marketing, he says, is the company's principal business. His clients? Some of them are what some people might call phone-sex operations, although Stamm prefers to use the term "date lines and chat rooms."

"They could, in fact, have a message that could be construed by somebody as phone sex," he says. "Some of them are alluring."

For investors, it's usually hard to say the same for a minitender pitch.