Jeffrey and Janette Stone are accused of artificially inflating
stock prices by sending spam emails.
Experts at SophosLabs™, Sophos's global
network of virus, spyware and spam analysis centers, have warned
users to be wary of emails offering unsolicited financial advice as
a married couple are charged by federal regulators with making $1
million through a stock market pump-and-dump scam.
42-year-old Jeffrey Stone and his wife Janette Diller Stone of
Greenwich, Connecticut have had civil fraud charges filed against
them by the Securities and Exchange Commission (SEC). The two are
accused of buying 288 million shares of WebSky Inc in September
2004, and weeks later making $1 million after artificially
inflating the stock price through a fraudulent spam campaign.
According to the SEC, spam emails sent by the Stones stated that
WebSky would have an annual revenue of more than $40 million
because of a successful venture in Argentina. In reality WebSky was
a start-up company with no revenues. The emails caused the firm's
stock price to rise more than 300%, according to the SEC, with 234
million shares being traded. WebSky had forbidden the Stones from
sending the emails, and told them that the Argentinian deal was not
viable.
"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," said Graham Cluley, senior
technology consultant for Sophos. "Stock spam is becoming
increasingly attractive to internet criminals because of the large
amounts of money that can be generated. Private investors need to
be wary of believing financial advice they receive in their inbox,
because it could be designed to only benefit the criminals who
spammed it out."
Sophos experts report that pump and dump stock campaigns account
for approximately 15% of all spam.
Charges were also brought against Douglas Haffner, CEO of
WebSky, for selling stock to the Stones in a subsequent deal
without registering the sale or obtaining an exemption from
registration, according to the SEC. Without admitting or denying
the action, Haffner and WebSky settled by agreeing to surrender the
$35,000 gained from the sale and to a permanent injunction against
violations of the registration provisions of federal securities
laws, the SEC reported.
"The SEC is holding officers of micro-cap companies accountable
if they improperly sell shares, as they may be fuelling the
'pump-and-dump' craze," continued Cluley.
Sophos recommends companies protect themselves with a consolidated solution which can defend against the
threats of both spam and viruses.
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 security and data protection solutions that are simple to manage, deploy and use and that deliver the industry's lowest total cost of ownership. Sophos offers award-winning encryption, endpoint security, web, email, and network access control solutions backed by SophosLabs - a global network of threat intelligence centers. With more than two decades of experience, Sophos is regarded as a leader in security and data protection by top analyst firms and has received many industry awards.
Sophos is headquartered in Boston, US and Oxford, UK. More information is available at www.sophos.com.