A Stock Spam Scam Case

A security lab has alerted users to be careful about e-mails that come with unsolicited financial advice. These are actually spam mail of the "pump-and-dump" type, which had also occurred in 2004. Two residents of Connecticut and the CEO of California firm have been charged by the Securities and Exchange Commission (SEC) because these people used the "pump-and-dump" scheme to deliver spam mail that artificially inflated the stock price.

Jeffrey Stone aged 42 and his wife Janette Diller Stone who belong to Connecticut, USA are accused of civil fraud charges filed against them by the SEC. The couple is alleged to have bought 288 million shares of WebSky Inc., way back in September 2004. Through a freak spam campaign they artificially raised the price of the stock and within weeks amassed one million US dollars.

According to the SEC, the spam e-mails send by the Stones mentioned that WebSky, which was having a successful venture in Argentina, would have annual revenue more than $40 m. But in reality WebSky was a nascent company that had made no revenues as yet.

The spam campaign soared the price of the company stock by more than 300 percent and the trading volume became 20 times more than expected. Stone and his wife obtained more than $1 million in the process, reported SEC.

Graham Cluley, senior technologist consultant for Sophos describes "pump-and dump" stock campaigns as those that spammers create by purchasing stock at cheap rates and then by campaigning good returns about the company, encourage others to purchase more of its stocks that result in artificial rise of the price. Cluley says that Internet criminals are increasingly sending out stock spam to generate large amounts of money. Thus private investors are cautioned about mails they receive that talk about financial conditions of companies they are not aware of.

"Pump-and-dump" scammers use a more common spamming tool, which are image-based spam that easily bypass spam filter and reach the intended victims. spam filters are unable to detect image content and so they cannot block such mails.

Sophos recommends companies to adopt a wholesome solution to protect themselves from spam and malware.

Related article: A New "Blackmailing" Variant Creeps Around…

» SPAMfighter News - 8/26/2006