SEC Suspends 35 Stocks That Were Mentioned in Spam
From May It Please the Court:
You and the Securities and Exchange Commission, that is. The SEC is shocked that spammers promote stock through email - so shocked that it suspended trading in 35 stocks that were promoted by spam. So shocked that the stocks were suspended for a whopping 10 days.
That’ll teach those spammers.
Stock spam amounts to 30% of the spam that’s out there - nearly 100 million stock spam emails a week. The other 70% must be spam ads for Viagra, if my inbox is any indication.
Former California Congressman (now SEC Chair) Chris Cox, had this to say in a press release, “When spam clogs our mailboxes, it’s annoying. When it rips off investors, it’s illegal and destructive. Today’s trading suspensions, and actions that will follow, should send a clear message to spammers: the S.E.C. will hold you accountable.”
Well, maybe not the spammers, but the companies, who the SEC believes are complicit in the spam campaigns. The way the scam works (you knew it was a scam, right?) is that a spammer picks a stock with a limited number of publicly available shares, then buys most of the shares. Next comes the spam email “tipping” you and me off to a great buy. We rush in, our demand drives up the value of the remaining stock, and the spammer then dumps his/her shares at these peak values, driving the price through the floor just hours after fools rushed in to buy.
The stock then never regains its glory high.
Punishing the company by suspending it however, may be like killing the messenger without solid proof of the company’s complicity. Punishing the stock purchaser before the run-up would perhaps be a more effective tactic.
But I’m just a country lawyer in backwater Newport Beach. And I don’t buy stock based on email tips.
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