Security company Sophos, which tracks viruses and spam, said
that it is seeing a growing number of emails seeking firms'
participation.
Pump and dump scams involve spam with a tip for a low-priced
share. The email will tell recipients that that share is about to
rise in price, and that recipients should buy it before it
does.
If enough recipients do buy the share then the scammers, who
have bought at low pre-scam prices, can sell shares at a profit.
The company whose shares are being traded is typically unaware of
the scam until it sees dramatic movements in the trading of
shares.
Sophos said that spammers are now looking to involve the firms
themselves. "You own an underrated stock and the market price of
your stock is from 0.001 to 1$," reads a typical email published by
the company. "We can increase the price of your stock and we can
increase average day trading volume. We can increase price up to
200–250% in 2–3 weeks and also we can increase volume by 10 times
each trading day. You don't have to pay anything in advance. First
we increase the price and the volume, then you pay."
The scam can cause havoc with the business whose shares have
been targeted and leave investors severely out of pocket. But the
danger of pump and dump schemes is that they can become
self-fulfilling since if enough people fall for the scam the share
price does actually rise as predicted.
"Not only do these crooks boost their own share price by
artificially playing the market, but now they have the audacity to
try and get paid for it by the companies involved," said Graham
Cluley, senior technology consultant for Sophos. "This twist also
sees the scammers offering information on upcoming stock
manipulations to investors."
"By actively manipulating stock prices by sending bogus
information out via junk email, they have an insight into which
shares are likely to shift position next. Investors must avoid
these offers at all costs, as they may find themselves caught out
in a criminal sting which leaves them out of pocket," said
Cluley.
