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CSA Calls To Exercise Caution Against Stock Spam

An Investor Watch has been issued by the 'Canadian Securities Administrators' (CSA) that urge people to delete spam mails that encourage investment opportunities.

The CSA consider such investment spam a growing problem. According to the agency, the stocks that the spams promote are generally 'micro-cap companies', that do business in small, "over-the-counter" market. And these stocks are not liable to follow the regulations established by stock exchanges like TSX or NASDAQ.

Security analyst Ron O'Brien of 'Sophos', the international virus and spam fighting company running a major lab in Vancouver understands the concern of securities commissions, said that the "pump-and-dump" messages increased by 40% over 2005 and they currently make up to 15% of total spam.

'Pump-and-dump' is a spam scheme in which online fraudsters artificially raise the price of a stock often by promoting through misleading information about the particular company. As the unsuspecting investors purchase the stocks and push up their value, the scam cons sell their shares at the peak market price.

Perry Quinton, 'manager of investor communications for the securities commission' said these spam mails follow the standard technique of spamming. But they use sophisticated language that may convince and fool the potential investors.

Quinton further said that the investment spam is starting to take off with full force. Not only investors but also the regulators are getting affected. She said she even gets themat work, implying they certainly exist.

Investors need to be cautious of unsolicited e-mails that campaign specific stocks. The e-mails may aim to encourage micro-cap companies, which often run on limited assets and trade with few established standards. Moreover, the micro-cap stocks sell in 'over-the-counter' (OTC) markets and the stock quotations are made on systems like the United States 'OTC Bulletin Board' and the 'Pink Sheets'. The security regulators do not recognize or regulate many of these markets.

The CSA and the council of securities regulators of Canadian provinces and territories serves Canada's provinces and territories to 'coordinate and harmonize' regulation for the Canadian capital markets. The CSA aims to protect investors from fraudulent practices by regulating the securities industry. It also educates investors about the risks, liabilities and returns of investing.

Related article: Cisco Finds Two Vulnerabilities and Recommends for Patches

ยป SPAMfighter News - 14-12-2006

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