SEC Playing Whack-a-Mole by Halting "Pump and Dump" Spam Stocks

Just a few days ago, the SEC halted trading of 35 different stocks that were being manipulated by pump and dump spammers.

A cursory scan through my junk email filter's intercepted spam folder reveals that the SEC can claim at least a partial success. None of the five different stocks I looked for were obviously being promoted in any spam messages sent since trading was halted in early March 2007. While it's possible some spammers were trying to pitch the stocks using images, usually there are a good number still using plain-text.

While their efforts may have helped, they clearly haven't solved the entire issue of pump and dump spam. You see, I just got a message promoting United Environmental Energy Corp (UTEV).

United Environmental Energy Corp isn't on the list of stocks the SEC stopped trading for.

There are thousands of different penny stocks trading "over the counter" - any of which are fair game for spammers to manipulate. I've really been quite surprised that spammers have seemed to obsess themselves with such a relatively small number of different stocks. Specifically, the stock trading as GDKI.PK has been subject to nearly countless different manipulation attempts over the last few years.

The website pumpdump.org tracks not only which stocks are getting spammed about, but the impact spam has had on their market prices.

In the future expect pump and dump spammers to focus on individual stocks for only a single "campaign" or two. The SEC will likely not intervene unless there's an ongoing effort to manipulate a stock - not just a single round of spam. If the scammers start shifting which stock they promote - it will be difficult to keep up.

If the SEC acts too quickly, the simple act of launching a "pump and dump" campaign for a stock could result in an immediate drop in price - as shareholders anticipate the SEC acting. Scammers could take advantage of this and ironically short stocks they promote instead of purchasing them.

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