I'm getting these junk emails with stock sugestions. The email has no text but only an image of text. Out of curiosity I checked the companies metnioned in the emails and they did genearlly increase stock value. Anyone know where these emails are coming from. Its always coming from a different address and always a different name.
2006-07-18 05:42:42 · 3 answers · asked by shellsandscripts 2 in Business & Finance ➔ Investing
It's called "Pump & Dump."
Someone takes a large position in a likely mover, usually a depressed Penny Stock, then they advertise and Pump Up the stock, and when people start pouring in and run the price up, they then Dump It for a nice gain.
And by the way, it's completely legal, but it's still a scam. Too bad, because price manipulation of any kind keeps most potential investors away.
2006-07-18 07:41:16 · answer #1 · answered by dredude52 6 · 0⤊ 0⤋
These emails are most likely coming from overseas - foreign individuals are less likely to be investigated for SEC/NASD infractions based on the verbage and methods in the emails. You're right, though, the emails do work for the spammers, and the senders make a nice profit with the majority of the stocks they "recommend".
Take a look at this link that investigates the issue:
http://www.user-groups.net/safenet/0603-05_stock_scam.html
Notice that UMSY was the most widely spammed ticker for the week ending 3/5/06 - it rose from the $0.13-$0.18 range in mid-February 06 to $0.40 by 3/6/06 - from 2/13 to 3/6, it had 8 double-digit % increase days!
It's interesting to note that UMSY still trades above $0.25, potentially indicating that some of the poor souls that traded into the name are still holding the shares (ie, the money may not have completely flowed out) - holding out hope that whatever bullish message they received will someday come true!
2006-07-20 09:10:59 · answer #2 · answered by tdsbu 2 · 0⤊ 0⤋
Most likely criminal spam gangs trying to drive up the share price in order to profit from it, through creating a buying spree from any daft prick gullible enough to follow their tips (and with the amount of people using the internet these days, there probably isn't a short supply of those).
2006-07-18 14:05:05 · answer #3 · answered by Anonymous · 0⤊ 0⤋