In one of the largest online stock manipulation campaigns in history, spammers sent out some 500 million e-mails last month advising recipients to invest in Prime Time Stores Inc.
This prime example of “pump and dump” scamming involved spammers purchasing shares in a company, promoting it, and then waiting for share prices to rise before selling their stocks and making a profit. This particular pump and dump scheme caused the amount of spam sent around the globe to increase by 30% over a 24-hour period.
Prime Time Stores owns the exclusive licenses for 7-Eleven stores in the Caribbean and Puerto Rico. The company is also involved in automotive, gas, and oil activities. The spam e-mails promoting the company announced the opening of Prime Time Stores in Puerto Rico and said that a huge change in the stock would occur on August 8, 2007.
In the days leading up to the spam campaign’s discovery, the stock did go up.
Pump and dump spam perpetrators can reportedly be very difficult to catch. This type of scam can be effective-especially when small stocks are involved and only a small gain is necessary to make a profit.
The spam e-mail promoting Prime Time Stores came with a PDF attachment. The PDF was what allowed it to get past the spam filters. The perpetrators of this scam have not been identified.
According to SophosLabs, stock scams via e-mail make up about 25% of all spam. At the start of 2005, e-mail stock scams only made up less than 1% of all spam emails.
Earlier this year, the SEC temporarily suspended trading in 35 Pink Sheet-listed companies that were involved in ongoing spam e-mail campaigns involving the companies’ securities. The suspension was part of SEC’s “Operation Spamalot” crackdown.
If you have been the victim of investor fraud, call Shepherd Smith and Edwards today. We have helped thousands of investors nationwide recoup their losses. We have represented clients in Federal and state courts and before the NASD, the NYSE, and the AAA.
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