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Date: 28 August 2014
SEC Cracks Down on Stock Spammers
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SEC Cracks Down on Stock Spammers :: 10 March, 2007


   
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The name of a new enforcement effort by the Securities and Exchange Commission summons up images of a Broadway musical comedy rather than a serious stock scam: Operation Spamalot.
But the SEC is serious in its effort to combat stock spam -- bulk e-mail messages pushing unknown stocks in get-rich-quick schemes. On Thursday, the federal agency suspended trading for 10 days in 35 stocks highlighted in spam campaigns.

By most accounts, spam now represents roughly 90 percent of all e-mail sent or received on the Internet, with stock-pushing spam accounting for as much as a third of all unsolicited commercial e-mail -- as many as 100 million e-mails each week, according to the SEC.

Pump and Dump

The kinds of e-mail that the SEC is pursuing usually push a company that has only a relatively small number of shares available to the public. The e-mails are readily recognizable with subject lines such as "Ready to Explode," "Ride the Bull," and the unsubtle "Fast Money."

Those spam victims who do buy the stock often find the value dropping quickly after the spammers have seen a spike in prices and sold their shares. The SEC said this could account for hundreds of millions of dollars in losses.

As one of several examples, the SEC cited Apparel Manufacturing Associates, Inc., which trades as APPM. It closed on a Friday in December of 2006 at $0.06 a share, with 3,500 shares traded.

After a weekend spam campaign, touting "huge news expected out of APPM," it spiked to $0.19 a share on Monday, with nearly 500,000 shares trading, before collapsing back down to $0.10 about a week later.

'Illegal and Destructive'

One company on the SEC's list, Red Truck Entertainment, is described as a Scottsdale, Arizona music and film company. However, its identity and business seemed to have changed as quickly as the subject lines in repeating spam. It had been known as Montana Oil and Gas, based in Vancouver, British Columbia, right after it was called Sierra Kitchen Galleries.

The company said that, after merging with an energy firm, it now sells country music and makes films, and has no idea it is being used in stock spam.

The SEC refused to divulge any information on whether the 35 companies' executives were under investigation, but said that, as many were located in Canada, it was receiving assistance from the Canadian police and regulatory agencies.

"When spam clogs our mailboxes, it's annoying. When it rips off investors, it's illegal and destructive," said SEC Chairman Christopher Cox in a statement on the SEC's Web site. "Today's trading suspensions, and actions that will follow, should send a clear message to spammers: The SEC will hold you accountable."

Release link: http://www.toptechnews.com/story.xhtml?story_id=022002GSMQRO

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