Spammers dump Pump 'n Dump spam

Stan Beer
Sunday, 24 June 2007 04:54

Your IT - Home IT

According to an email and Internet content security provider, stock “pump ‘n dump” spam has dropped significantly. Stock spam now represents 5% of all spam compared to 50% in February.

“At the beginning of the year, “pump ‘n dump” spam was very popular, peaking at 50 per cent of all spam in February,” said Bradley Anstis, Director of Product Management, Marshal.

Pump ‘n dump spam is a form of financial fraud that involves artificially inflating the price of a stock through untrue or exaggerated promotion in order to sell stock at the inflated price. Once inflated, the spammers sell their stocks to make a profit which usually leads to the stock price crashing, leaving real investors with major losses.
 
Over the past quarter, pump ‘n dump spam levels have fluctuated, but averaged around 30%, according to Marshall. In just the last four weeks, the Marshal TRACE team observed a rapid decline in the volume of stock spam to the lowest point it has seen in 10 months - 5.1%.

The recent decline in pump ‘n dump spam could in part be attributed to the steps taken recently by the US Securities and Exchange Commission (SEC) which suspended the trading of more than 30 companies targeted by pump ‘n dump spam earlier in the year.

“Whether the decline in “pump ‘n dump” spam is due to the SEC’s recent action, overuse by spammers or increased use of advanced spam filtering solutions is moot. Evidently stock spam is significantly less effective in generating profits for spammers,” said Anstis.

Marshal says pump ‘n dump spam is far more risky for spammers compared to other types of spam. Unlike spam touting pornography or pharmaceutical products where the spammer is simply trying to sell a product, stock spam requires that the spammers to invest some of their own money first. It is a gamble for the spammers, but in the past it has been enormously successful for them. Analysts have found that stock prices were affected following a pump ’n dump spam campaign.

 “Now that fewer stock spam messages are making it through spam filters and more end users are savvy to the spam technique and less inclined to be sucked into the scam, spammer’s gains have likely dwindled  Subsequently the risks associated with the investment needed for stock spam make it no longer as attractive to spammers,” said Anstis.