SEC Goes After Stock Spammers

Has your e-mail in-box been bombarded with "hot tips" on certain stocks about companies you have never hear of before and that guarantee enormous returns on your investment? I know my in-boxes have. And what's more, they seem to have the ability to get by many spam filters that have even been trained to block them.

Well, expect to see a slowdown in this type of garbage, at least I hope so. The Securities and Exchange Commission has taken action against alleged stock promoters and hackers thought to have broken into trading accounts to perpetrate their alleged frauds. The SEC has suspended trading in the securities of 35 companies that were heavily promoted in spam e-mail campaigns, it said in a statement. The trading suspensions, the most ever aimed at spammed companies, were ordered because of questions about the adequacy and accuracy of information about the companies.

The SEC also won an emergency court order freezing assets in a Latvian-based bank's trading account that allegedly was used in "pump and dump" manipulation of shares in 15 different companies. The "pump and dump" scheme is designed to quickly and cheaply disperse false information about a company's stock, along with information obtained from recent press releases, to potential investors via e-mail. Typically targeting microcap companies' stock, the idea is to get many people to buy this stock all at once and drive up the price...then these fraudsters dump their shares at an inflated price. Of course, the stock price then falls and investors ultimately lose their cash.

As part of the pump-and-dump scheme, online brokerage accounts at seven firms were breached and used to manipulate the market and boost the price of specific stocks, the SEC said. Through this technique, the unknown hacker-traders generated $732,941 in illicit profits and cost U.S. brokerages some $2 million in losses.

The trading suspensions are part of an SEC effort code-named "Operation Spamalot." The effort seeks to shield investors from the potentially fraudulent spam e-mail campaigns that hype penny stocks. The SEC estimates that 100 million such e-mail messages are sent every week, triggering spikes in share prices and trading volume. Investors then lose their money when the spam campaign stops, according to the SEC.

I just want the e-mail to go away so I don't have to waste my time marking it for deletion.