In a new twist, it seems that pump and dump fraudsters are now exploiting social media networks to artificially inflate the price of stocks in addition to boiler room scams, 'blast faxes' and more traditional e-mail spam.
As part of its crackdown on stock market spam, the US Securities and Exchange Commission (SEC) says it has suspended trading in three companies that have posted promotional videos on social networking site YouTube urging investors to buy shares.
The companies - NeoTactix Corporation, Graystone Park Enterprises and Younger America - apparently posted promotional videos on YouTube to coincide with spam e-mail campaigns.
Linda Chatman Thomsen, director of the SEC’s division of enforcement, says the SEC will take "aggressive action" against stock promoters and spammers, including those who are exploiting investors through YouTube.
The YouTube example shows that fraudsters are finding different ways to exploit technology for criminal gain. However some spamming techniques appear to be more effective than others.
Last year US anti-spam outfit SpamStopsHere warned that spammers had begun using MP3 files named after popular recording artists and songs, to spam e-mail to promote stock for pump and dump scams.
But after listening to the slow, long, drawn-out message on the MP3 spam file - by following the link in the
Finextra story - I am amazed that anybody manages to listen to the message without falling asleep, let alone buy the stock.
Ted Green, president of SpamStopsHere, said the messagesdetected so far were "just a test by spammers to determine the effectiveness of MP3 spam".
One of the more unusual recent spamming techniques was reported by
PandaLabs in September 2006 when it said it had detected spam messages that used subliminal advertising techniques in order to manipulate "the subconscious of Internet users" to get them to buy certain stock online.
"At first glance, it is an advertisement that gives the user the opportunity to buy certain stocks online. However, the user not only sees a static image, but also a sequence of images that are displayed extremely rapidly. To be more specific, there are
four images, three of which show the word Buy in different positions," said PandaLabs at the time.
PandaLabs said the word 'buy' appeared on screen for a maximum of 40 milliseconds, and in some cases, for only 10 milliseconds. Although the recipient is not consciously aware of the 'buy' message, the subconscious levels of perception receive it and store
it, influencing the recipient, said the vendor.