The Securities and Exchange Commission and the Financial
Industry Regulatory Authority (FINRA) today issued a warning to investors about
a sharp increase in e-mail linked to "pump-and-dump"
stock schemes.
The investor alert entitled Inbox Alert - Don't Trade on
Pump-And-Dump Stock E-mails notes that the latest McAfee Threats Report
confirms a steep rise in spam e-mail linked to bogus "pump-and-dump"
stock schemes designed to trick unsuspecting investors. These false claims
could also be made on social media such as Facebook and Twitter as well as on
bulletin boards and chat room pages.
"Investors should always be wary of unsolicited
investment offers in the form of an e-mail from a stranger," said Lori
Schock, Director of the SEC's Office of Investor Education and Advocacy.
"The best response to investment spam is to hit delete."
"Spam e-mail is the bait used to lure people into
making bad investment decisions. No one should ever make an investment based on
the advice of an unsolicited email," said Cameron Funkhouser, Executive
Vice President of FINRA's Office of Fraud Detection and Market Intelligence.
Pump-and-dump promoters frequently claim to have
"inside" information about an impending development. Others may say
they use an "infallible" system that uses a combination of economic
and stock market data to pick stocks. These scams are the inbox equivalent of a
boiler room sales operation, hounding investors with potentially false information
about a company.
The fraudsters behind these scams stand to gain by selling
their shares after the stock price is "pumped" up by the buying
frenzy they create through the mass e-mail push. Once these fraudsters
"dump" their shares by selling them and stop hyping the stock,
investors lose their money or are left with worthless or near worthless stock.