SEC bars trading in 35 spam-touted companies
Rampages through the Pink Sheets
The Securities and Exchange Commission (SEC) today hit back at 'pump and dump' fraudsters by suspending trading in 35 companies that have been the "subject of recent and repeated spam email campaigns". Next step of its pleasingly named "Operation Spamalot", is to find the perpetrators and bring them to justice.
All the suspended companies are from the "Pink Sheets" and are quoted on an unsolicited basis - in other words, they are not listed on any exchange, they are not subject to the reporting requirements of publicly quoted companies and brokers are not required to conduct due diligence regarding the issuers.
Each week, some 100 million emails are sent with subject headers such as "Ready to Explode," "Ride the Bull," and "Fast Money", the SEC says. Astonishingly, they work a treat, "triggering dramatic spikes in share price and trading volume before the spamming stops and investors lose their money".
In its press release announcing the suspensions, the SEC reveals three examples of spammers at play. Here's one:
"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.
Sponsored: Network DDoS protection