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26 Jun 2006

Cosmetics company's stock price rises sharply following spam campaign

Sophos warns traders to be wary of pump-and-dump spammers

Experts at SophosLabs™, Sophos's global network of virus, spyware and spam analysis centers, have protected users against a spam campaign that is attempting to make money for criminals by inflating the stock price of a cosmetics company.

On Wednesday 21 June, Sophos experts issued protection against a widespread spam campaign that encouraged users to buy stock in a company called Southern Cosmetics. The emails, which consisted of an embedded graphic in an attempt to avoid detection by anti-spam filters, told recipients that savvy investors would be wise to buy stock in the company because of business deals it was making with Naomi LLC, a cosmetics firm endorsed by country music singer Naomi Judd.

The spam email encourages people to buy stock in Southern Cosmetics

The spam email took the form of a graphic, encouraging people to buy stock in Southern Cosmetics.

Sophos experts identified the emerging spam campaign, and issued Genotype protection protect against it and potential future campaigns which might share similar characteristics.

However, an examination of Southern Cosmetics' share price shows that there has been a marked increase in trading in the stock since the spam campaign, and the share price from to a high of 6.6 cents from its pre-spam campaign low of less than one cent per share.

Southern Cosmetics' stock price rose dramatically following the spam email

Southern Cosmetics' stock price rose dramatically following the spam email.

"Spammers spread short term 'investment advice' in the hope of pumping a stock enough to offload their own shares at a profit. The increasing quantity and sophistication of pump-and-dump campaigns suggests that there is plenty of money to be made," said Graham Cluley, senior technology consultant for Sophos. "Of course, legitimate investors are left to bear the after-effects of any eventual stock dump."

Pump and dump stock campaigns work by spammers purchasing stock at a cheap price and then artificially inflating its price by encouraging others to purchase more (often by spamming "good news" about the company to others). The spammers then sell off their stock at a profit. Sophos experts report that pump and dump stock campaigns account for approximately 15% of all spam.

Sophos recommends companies protect themselves with a consolidated solution which can defend against the threats of both spam and viruses.

About Sophos

More than 100 million users in 150 countries rely on Sophos as the best protection against complex threats and data loss. Sophos is committed to providing complete security solutions that are simple to deploy, manage, and use and that deliver the industry's lowest total cost of ownership. Sophos offers award-winning encryption, endpoint security, web, email, mobile and network security solutions backed by SophosLabs - a global network of threat intelligence centers.

Sophos is headquartered in Boston, US and Oxford, UK. More information is available at www.sophos.com.