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Washington, D.C., March 8, 2007 - The Securities and Exchange Commission this morning suspended trading in the securities of 35 companies that have been the subject of recent and repeated spam email campaigns. The trading suspensions - the most ever aimed at spammed companies - were ordered because of questions regarding the adequacy and accuracy of information about the companies.
The trading suspensions are part of a stepped-up SEC effort - code named "Operation Spamalot" - to protect investors from potentially fraudulent spam email hyping small company stocks with phrases like, "Ready to Explode," "Ride the Bull," and "Fast Money." It's estimated that 100 million of these spam messages are sent every week, triggering dramatic spikes in share price and trading volume before the spamming stops and investors lose their money."
[edited by: engine at 5:04 pm (utc) on Mar. 8, 2007]
[edit reason] added link, thanks bobothecat [/edit]
The flip side is that scammers will claim the emails came from "naked shorters" who only want to drive down fledgling entrepreneurs. Thats what took this so long.
No one in politics wants to be seen as Anti-business, never mind that most of the 35 are probably 100% frauds.
Still don't understand, why after all these years, a known technology of verifying that an email was sent by the sending domain hasn't taken place. While it won't "solve" spam, it will take an enormous bite out of it.
Am I missing something or are they actually punishing the victims?
The company itself almost always denies knowing about the spam beforehand. My guess is the spammer must at least touch base with the company. He wouldn't want to buy a huge block of stock at the same time the stock releases bad news. I'm sure there are often secret kickback arrangements run thru offshore banks and the like.
Three months later the subject of the spam will change its name, do a reverse split, get a new stock symbol, issue far more shares, and go into a new line of business...whatever is hot at that moment.
The cycle can go on for years.
Then again there are some really stupid people out there who are really gullible.
I did not see CBRP, CBRJ or NNCP.
Seems to me that the SEC is moving so slow that by the time they suspend trading, the pump and dumpers have moved on. Then again, I'm not surprised that the SEC is late coming to the party.
The only people that won't be able to sell are the victims.
If people make money in one penny stock, they're sure to lose it on the next or the one after that. It's futile to help these people get restitution. (and the money usually is in some offshore bank within hours)
With most reputable stock brokers one really has to work to buy these junk stocks. Warnings pop up when online orders are attempted.
SEC is getting involved now for two reasons: 1) email spam which has shined light on this sleazy corner of the stock market; 2) the use of such stocks to launder money or make money for some very scary offshore types.
When they do, I would expect the SEC to arrest them and they would get fined and possibly even jailed.
The SPAMMERs want people to buy the stocks they are promoting. Suspending trading (if done in a timely manner) is one way to at least slow them down. It also puts the SPAMMERs on alert that the stock is being watched and anyone dumping a lot of those shares will (should, anyway) be red flagged for further investigation.