Pump and Dump Schemes Shut Down
In eWeek's Welcome to the Spam Economy we a hope of some legal tools for dealing with spam. The Securities and Exchange Commission won a court order to freeze the assets of a Latvian bank involved in a pump and dump scheme (SEC Freezes High-Tech Pump and Dump Scheme). The agency has also suspended trading on 35 companies suspected of pump-and-dump operation. According to eWeek
The Securities and Exchange Commission has suspended trading in securities of 35 companies suspected to be spammers as part of a new effort, "Operation Spamalot," to shut down potentially fraudulent spam hyping small company stocks with phrases such as "Ready to Explode," "Ride the Bull" and "Fast Money."
The SEC has estimated that 100 million of these messages are sent weekly and that they trigger "dramatic spikes" in share price and trading volume before the spamming stops and investors lose their money.
Bot herders responsible for these pump-and-dump operations may be getting paid in shares of the stocks they pump. But with the SEC freezing trading, these stocks are essentially worthless, at least until they begin trading again at which point they will probably still be worthless.
This is also a warning to investors getting these hot tips from unknown senders - don't risk your money, you may be buying junk. But then again, they should know that already.
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