In the ever-escalating world of cyber insecurity, it's rare to find good news. And yet the Security and Exchange Commission on Thursday did just that as it reviewed data showing stock-touting junk mail has dropped significantly since a tough anti-spam campaign kicked off in March.
Spam related to financial services comprised 21 per cent of all junk mail in the first six months of this year, down from 30 per cent during the last six months of 2006, according to a recent report from Symantec. The drop came even as the overall amount of spam rose, said Doug Bowers, senior director of anti-abuse engineering at Symantec. He added that financial junk mail was just 13 per cent in September.
Symantec attributes the drop to the SEC's antispam initiative, in which the agency temporarily suspends trading of penny stocks that are the subjects of pump-and-dump spam. Since March, the SEC has suspended securities trading in 42 companies, agency spokesman Bruce Karpati said. The move effectively pre-empts scammers' ability to profit from the phony emails.
"If the SEC stops trading on stocks being promoted through spam, then the price won't be driven up and spammers won't be able to make money,"
The SEC has also seen a decline in the number of items submitted to its online complaint center. More than one million complaints were made in the last half of 2006, compared with 727,313 for the first six months of this year. The agency fielded just 67,785 complaints in September, compared with 166,741 in February, the month before the anti-spam initiative was launched.
Just around the corner
Pump-and-dump emails typically tout "big news" just around the corner that is sure to drive up the stock price of an unknown company and encourages the recipient to buy while the price is still low. When the shares rise, the scammers sell previously bought stock at a profit.
A single spam campaign can cause stock prices and trading volume to spike, as was the case in mid-December, when mass email touting Apparel Manufacturing Associates (Ticker: APPM) caused the shares to soar from six cents to 45 cents in five days. The number of shares trading hands rose as much as 138-fold.
On Thursday, the SEC suspended trading for three companies that "haven't provided adequate and accurate information about themselves to the investing public". All three - Alliance Transcription Services (ATSS), Prime Petroleum Group (PPGU) and T.W. Christian (TWCI) have recently changed names and are being quoted under new ticker symbols, according to the SEC.
That makes them "susceptible to spam stock promotions because they have inadequately disclosed" key details including assets, business operations and current financial condition, according to the SEC. ®