What Do You Do If You're The CEO Of A Company Touted In A Pump-And-Dump Stock Scam?

from the sell! dept

Fri, Dec 1st 2006 8:19am — Mike Masnick

It's already been well documented that there really are a lot of idiots out there who buy stock recommended in spam messages. They all lose money when the spammer (who buys earlier) then sells, but apparently the pump-and-dump stock spam concept still works, despite it being around for many years. However, there is another side of the story that's rarely covered. What do you do if you actually work at one of the companies touted in a stock spam scam? Some people naturally assume that these companies are in on the scam, but that's often not the case. Spammers make money either way. So, for legitimate companies, it's become something of a hassle to find their stock (which usually is already in some sort of trouble) suddenly bounce around due to a spam onslaught. Of course, it would seem like it really shouldn't be that difficult to track down who's responsible for the spam. You just need to follow the money and find out who bought the stock right before the spam and then sold right after.

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11 Comments

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mkvf, 1 Dec 2006 @ 8:48am

"You just need to follow the money and find out who bought the stock right before the spam and then sold right after."

IANA broker, but I'm guessing you'd use fake identity, anonymous offshore accounts, or whatever to buy the stocks, if you were doing this for a living. Would be silly to spend time (or money) getting a botnet set up and spewing spam, only to incriminate yourself so obviously by using your real identity to buy and sell the stocks.
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- Raymond, 1 Dec 2006 @ 9:17am
  
  Re: and even if you find them
  And even if you find the spammers, you can't prove it. They'll say "Hey, it's just a coincidence!
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G8RDA, 1 Dec 2006 @ 9:07am

Short
So if I get one of the spam emails should I be shorting the stock?
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- Anonymous Coward, 1 Dec 2006 @ 10:39am
  
  Re: Short
  So if I get one of the spam emails should I be shorting the stock?
  Hmm, now that's an idea! I wonder if the SEC would then accuse you of being part of the scam though?
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Only idiots buy from spam, 1 Dec 2006 @ 9:18am

I get these all the time
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*WEXE* *WEXE* *WEXE*
WEXE GAINS ENORMOUS MOMENTUM!
UP 17% ON FRIDAY ALONE!

Company: WEST EXCELSIOR ENT (Other OTC:WEXE.PK)
Symbol: WEXE
Price: $0.70
5-day Target: $4
Rating: Strong Buy

West Excelsior Enterprises Inc. Completes Financing
and Meets its Option Agreement Commitments

GET ON THIS BULL RUN NOW!
WATCH WEXE ON MON NOV 27TH!
Disclaimer: Information within this email contains "forward looking statements"
within the meaning of Section 27a of the Securities act of 1933 and Section 21B
of the Securities exchange act of 1934. The Publisher of this report was
compensated by an unrelated third party twenty five thousand dollars for
distribution of this report.

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FatBoy, 1 Dec 2006 @ 9:33am

Stole My Domain
One of these scum spammers was using my domain as the return address and return path. For weeks on end, I received endless backscatter from undeliverable emails.

Castration would be too kind for these vermin, but it would be a good start. I'd use a dull razor.
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- Bryan, 1 Dec 2006 @ 9:46am
  
  Re: Stole My Domain
  I'd suggest a dull hammer. it's funny this ad was right under the article when i read it. Explosive Stock Gains Hot Undervalued Penny Stock. Buy Now For Huge 700% Profit! UrgentStockAlert.com Ads by Google Bryan
  [ link to this | view in chronology ]
Lucas, 1 Dec 2006 @ 9:52am

Buying stocks from a stranger?
I still remember when a close family member (I won't identify who, since it would probably be a little embarassing for them) bought some stuck from a stranger over the phone who happened to call (this was before the days of email).

They bought about $1000 worth of stock in a small mining company that went out of business within a few weeks. I was completely surprised that this family member (who is a very intelligent and worldly person otherwise) would be suckered into such a scam.

I guess it just goes to show that even smart people are not smart all the time. Or we all make mistakes? Maybe I'm just not very good at picking out morals from stories.
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- gdwntx, 1 Dec 2006 @ 12:06pm
  
  Re: Buying stocks from a stranger?
  Easy money always costs you more than hard work.
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- Mikester, 1 Dec 2006 @ 2:36pm
  
  Re: Buying stocks from a stranger?
  I guess it just goes to show that even smart people are not smart all the time.
  Or... it shows that even smart people can be motivated by greed.
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another, 4 Dec 2006 @ 7:32am

Following the money isn't all that easy
Its not all that easy in some financial institutions to be able to track who is buying or selling a stock. Systems like that are expensive, and some firms do a better job than others. Sure, you can go back over time to figure those things out, but its not an easy process.

Not easy you say? This is all about KYC (know your customer), AML (Anti-money laundering) and CIP (customer information programs) and even the big boys don't do this well. The SEC has put everyone on notice that the 07 audits won't be like the past, and no one is doing a good job. Wall Street is running scared, and since they recently got involved with securities, banks are too stupid to know they should be afraid.

There are banks and wall street firms out there who are paying huge fines today over these issues. Fines about $200 million dollars. Do you ever read about them? Of course not, because the company sure doesn't want that information out there, and the govt. doesn't want it out there because it would make it easier for copycat or criminal or terrorists to move money.

Following the money is really hard to do. It takes time and effort. Think they really care that much about a pump and dump?
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