Spam spawns stock 'blowing' scam

Spammers find a new way to annoy and defraud users

Spam is now being used to push up flailing stock prices so dubious share traders can make a quick and often profitable dollar.

One spam email currently circulating attempts to generate interest in troubled stocks (some offered at as little as less than a cent per share), and once buyers are lured into purchasing the stock the shares are dumped on the market and sold for a heavily inflated profit, leaving the new owners with an expensive portfolio of worthless stock.

At first glimpse the email seems benign because it doesn't invite recipients to divulge account details, according to Clearswift managing director Peter Croft.

"The irony of this spam is the subtlety in the way it works. Proponents of the scam find listed companies that are trading low, maybe around a tenth of a cent, buy large amounts of stock and then dump them at a profit," Croft says.

"It is cheap and if the scammers stay under certain percentage limits for trading the trade is not known to the stock exchange."

So far, the scam is largely a phenomenon targeting companies trading on the Nasdaq and the NY Stock Exchange, and is largely thwarted by intelligent practice, according to Croft.

"If stockbrokers were asked for advice they would encourage clients against buying junk stocks. Many DIY traders and banks now have facilities where individuals can make stock trades as a commodity service, but good advice pays for itself," he says.

According to figures released from Clearswift, this type of spam has increased nearly 3% from last month to 17.7% of all received spam and was first discovered in April 2004.

Sophos managing director Rob Forsyth said such emails are not part of a new trend or a current problem locally, even though it too has received a number of similar emails.

"Some have turned up in Australia regarding 'stock blowing', where spammers talk up a number of companies in an initial email then follow up later with another saying it will go up," Forsyth says.

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