Stock Scam Spam Revisited
Fred catches up on the resurgence of stock scam spams and pump-and-dump schemes and answers some readers' questions about such evils.
UGN Safe-Net making waves
Back in the winter we ran a 6-week series on stock spam and pump and dump schemes. At the end of the series we felt rather smug about it all, since the quantity of stock spams diminished to almost nothing. Whether it was spammers getting off our list, or our reporting crusade having an effect, the load of spam dwindled so low we felt it no longer necessary to keep reporting.
Alas, all good things must end. The summer months have experienced a resurgence of stock scam spam like never before. Over the past two weeks we've seen 8-hour periods where stock scams accounted for as much as 30% of the spam received. And, it's not just us. We've received dozens of letters from readers complaining of the very same thing -- receiving the very same pump-and-dumps we have.
A reader in Riverside, CA writes:
" . . . I found you by doing a search on one of the names of the stocks in a spam I received. I'm getting these spam stock ads again too. I can't stop them -- they come from different email addresses and advertise different stocks each time but the layout and format are exact and my browser can't track them through "page source" or "java script" I have many email addresses listed in my spam mail blocker though -- if you would like these addresses I'll send them to you. I am sick of these ads -- i get dozens every week...but everytime it's a new "sender" same stock ads. help me if you can. thanks [END QUOTE]
Sorry, Riverside
Almost all spam sends from a different address each time, and these scams are particularly evil because they are just plain text spams. So, there's no way to track them for abuse reports. Filtering by email address will only frustrate you and load up your filters, slowing your mail. A better philosophy is filtering for common word phrases. But be mindful to chose your phrases with care.
We also get a bunch of letters like this one asking for help:
This reader from Wichita, KS writes:
"... what should I do if I have invested money in some of these companies that turned up on the stock scam list, I too had subscribed to motley fool and all of sudden I started getting a lot of emails about stocks, but most of them I had typed in the company on yahoo and researched them but apparently not enough so I am one of those who fell in the stock trap. My question is, do I report it to someone or just write it off as a loss at the end of the year. Please advise me. Thanks for your info I just stumbled upon it and I wish I had stumbled sooner instead of bumbleing along. [END QUOTE]
No help, Wichita
This is a really tough one, and we cannot even begin to claim to be investment experts. The best policy is never buy ANY stock pumped through spam. Just don't do it.
If, like this reader, you get hooked and do happen to purchase some of the loser's stock, then the best (and only) thing you can do is :: sell out and take your licks. My main man at Wachovia Securities says:
The pumper will buy low then pump it up to a profit, then sell -- watch it drop, then buy back and pump again -- hopefully to ratchet up a fair profit. So watch the stock closely. It might reach your original purchase price again -- perhaps a few cents over -- and that's the signal to sell.
Otherwise, you can just follow your investment down the toilet and walk away from it. The best advice is to get an investment advisor you can trust and develop a relationship with. Over time, they'll learn your investment philosophies and needs and steer your into good, productive investments. Then let them do their job. Amateurs dabbling in the stock market almost always spells losses. And, stay away from any stock promoted in spam.
