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SEC Halts Spam Related Stock Trading
David Utter
Staff Writer
2007-03-09
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The Securities and Exchange Commission suspended trading on 35 companies that have been featured in millions of spam messages.
 | | SEC Halts Spam Related Stock Trading |  |
About a hundred million pump-and-dump spams have been going out weekly as criminals seek suckers to buy into a number of over the counter stocks. Once they buy in and pump up the value, the spammers quickly dump their shares and profit, leaving others holding nearly worthless shares.
The SEC launched "Operation Spamalot" to combat these fraudulent schemes. They announced the 35 trading suspensions and said it was the most ever aimed at spammed companies.
Several examples of these pump-and-dump scams in action appeared in the SEC's statement, like the trading on this company:
On Friday, Dec. 15, 2006, shares in Apparel Manufacturing Associates, Inc. (APPM) closed at $.06, with a trading volume of 3,500 shares. After a weekend spam campaign distributed emails proclaiming, "Huge news expected out on APPM, get in before the wire, We're taking it all the way to $1.00," trading volume on Monday, Dec. 18, 2006, hit 484,568 shares with the price spiking to over 19 cents a share. Two days later the price climbed to $.45. By Dec. 27, 2006, the price was back down to $.10 on trading volume of 65,350 shares.
The short time frame shows how quickly these grifters take advantage of their spamming. It's also a sad commentary on the greed of spam recipients who buy into these stocks; pump-and-dump schemes, and pretty much all product/service spam, wouldn't work if people would stop buying into them.
Paul Kedrosky added an interesting observation to Operation Spamalot. He noted that of the 35 companies suspended, 8 of them are based or had offices in Canada. Kedrosky attributed this to "the continuing lax oversight of Canadian public companies."
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Tags: SEC, Spam, Pump and Dump
About the Author:
David Utter is a business and technology writer for SecurityProNews and WebProNews.
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