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SEC Terminates Securities Trading in Three Companies

The US Securities and Exchange Commission, on March 20, 2008, terminated share trading in three small-sized business firms for ten days because it thought that the companies were involved in pump-and-dump spam.

SEC, which identified the companies as Younger America, Graystone Park Enterprises, and NeoTactix, charged them of not only for spamming but also for making inadequate disclosure of their assets, existing financial condition, and business operations.

With the announcement of suspension order, SEC boasted about its successful crackdown on spam over the past year. It said that the crackdown had resulted in a 66% reduction in the number of reports or complaints about junk financial e-mails. Further according to SEC's data, complaints came down to 68% in February 2008 over the preceding twelve months.

SEC also said that through its 'Anti-Spam Initiative,' it had suspended securities trading in 50 organizations and also enforced several actions against promoters, insiders and spammers. The current three suspensions materialized due to the combined effort of the SEC's offices in Washington D.C., Denver, and New York.

John Stark, Chief of Internet Enforcement at SEC, said that the securities trading suspension was the Commission's first such enforcement action involving video-promoted stocks on the Internet.

According to reports coming to security companies, the first time that video-based pump-and-dump scam was detected in December 2007. This means that only recently spammers have started using videos among their other arsenals.

Explaining scam e-mails involving stocks, security providers said that a majority of these relied on huge volumes of spam mails that promote a relatively lightly-traded or unknown company's stocks. As recipients begin trusting the e-mails and start buying the shares, the latter's price soars. At that point, the scammers, who had already bought the shares at reduced prices, sell them off and make large profits. After that the share value normally drops rapidly leaving the recipients of the spam with empty bags.

Meanwhile, SEC's 'Anti-Spam Initiative' has become a component of the recently formed 'microcap fraud detecting team' within the Division of Enforcement. And this Division's Online Complaint Center similarly shows a 30% decline in complaints about spam over the same twelve months.

Related article: SEC Imposes Trading Ban on 35 Companies

ยป SPAMfighter News - 28-03-2008

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