IT security and control company Sophos has reminded stock
traders of the danger of "pump-and-dump" financial spam campaigns,
following the announcement that the SEC has
suspended trading of 35 companies.
The Securities and Exchange Commission, who have dubbed the
action "Operation Spamalot", are hoping to neuter the success of
hundreds of millions of spam messages sent each week containing
bogus investment information.
Spammers are spreading realistic-looking 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. Of course, the companies which were talked up, and their
legitimate investors, are left to bear the after-effects of the
stock dump.
"The SEC won't have made a decision like this lightly. They are
clearly worried that investors are in danger of being conned by the
commonly encountered spam campaigns to invest in usually fairly
comatose penny stocks," said Graham Cluley, senior
technology consultant at Sophos. "The fortunes which can be made
through "pump and dump" campaigns are enormous, and - if caught -
those responsible for the stock market manipulation can receive
substantial fines and jail sentences."
An example of a stock pump-and-dump spam
offering investment advice in Goldmark Industries, one of the
companies which has had its trading suspended.
According to Sophos experts, the public needs to learn to never
trust an anonymous internet tipoff, and to exercise more caution
about which companies they choose to invest in.
"You wouldn't necessarily believe a tip given to you by a
stranger on the bus, so why would you give credence to an email
that arrives from nowhere out of the blue?", continued Cluley.
"Organized activity by spammers and hackers requires a co-ordinated
defense to protect the wallets of innocent traders. It will be
interesting to see if the SEC takes more proactive action to defend
investors like this by suspending trading in specific penny stocks
in future."
The 35 companies who have had trading suspended until 11:59pm,
EDT, on March 21 2007 are: Advanced Powerline Technologies Inc.
(APWL), America Asia Petroleum Corp. (AAPM), Amerossi Int'l Group,
Inc. (AMSN), Apparel Manufacturing Associates, Inc. (APPM), Asgard
Holdings Inc. (AGHG), Biogenerics Ltd. (BIGN), China Gold Corp.
(CGDC), CTR Investments & Consulting, Inc. (CIVX), DC Brands
International, Inc. (DCBI), Equal Trading, Inc. (EQTD), Equitable
Mining Corp. (EQBM), Espion International, Inc. (EPLJ), Goldmark
Industries, Inc. (GDKI), GroFeed Inc. (GFDI), Healtheuniverse, Inc.
(HLUN), Interlink Global Corp. (ILKG), Investigative Services
Agencies, Inc. (IVAY), iPackets International, Inc. (IPKL), Koko
Petroleum Inc. (KKPT), Leatt Corporation (LEAT), LOM Logistics,
Inc. (LOMJ), Modern Energy Corp. (MODR), National Healthcare
Logistics, Inc. (NHLG), Presidents Financial Corp. (PZFC), Red
Truck Entertainment Inc. (RTRK), Relay Capital Corp. (RLYC),
Rodedawg International Industries, Inc. (RWGI), Rouchon Industries,
Inc. (RCHN), Software Effective Solutions Corp. (SFWJ), Solucorp
Industries Ltd. (SLUP), Sports-stuff.com Inc. (SSUF), UBA
Technology, Inc. (UBTG), Wataire Industries Inc. (WTAF), WayPoint
Biomedical Holdings, Inc. (WYPH), and Wineco Productions Inc.
(WNCP).
The SEC is inviting any broker-dealer, investor, or other person
with information relating to the investigation to email them at
35suspensions@sec.gov.
Sophos recommends companies protect themselves with a consolidated solution which can defend against the
threats of spam, spyware 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.