Stopping Spam From Playing The Market
It is a growing problem and now “Operation Spamalot” has forced big business to join forces, as the bad guys have.
Via the Washington Post:
Securities regulators yesterday halted trading in nearly three dozen companies — the initial salvo in “Operation Spamalot,” a campaign to block e-mails promoting stocks to unsuspecting investors.
The crackdown against investment spam amounts to the biggest such action in the history of the Securities and Exchange Commission. Shareholders lost tens of millions of dollars in the past year by biting on fraudulent Internet offers to “ride the bull” or win “fast money” by buying thinly traded stocks, agency officials said. They continue to investigate whether the spam emanated from third-party stock promoters, corporate insiders or both.
This has a chance to be effective as the emails are traceable (we know if they’ve been sent) and the results are hard to deny or overlook.
Stock trading in each of the companies, including CTR Investments & Consulting of Pasadena, Md., will be halted for at least 10 days, according to the terms of an emergency order that regulators sought yesterday. Authorities said that “questions have arisen regarding the adequacy and accuracy of press releases concerning the company’s operations,” according to the order.
Plus there’s money involved, that always gets things moving and makes security concerns all-of-a-sudden important.
One of the e-mails investigators released yesterday promoted the “huge news expected out on APPM, get in before the wire.” Trading volume on Dec. 18, 2006, the first weekday after the e-mail launch, rose nearly 140-fold, to 484,568 from 3,500 shares, and the stock price rose to 19 cents per share from 6 cents. Less than two weeks later, the stock of Apparel Manufacturing Associates, of Bloomfield, Conn., slid back to 10 cents per share.