It turns out those emails you get pumping some stock.

Terry O'Keefe · Sep 28, 2006

that you've never heard of before....well they work. Not for you, you are the sucker. But they work for those who are behind them.

E-mail stock scams effective
Study shows 'pump and dump' schemes working

By GREG SAITZ
Newhouse News Service

In the spring of 2004, a barrage of e-mails touting the stock of a New Jersey company began arriving at computer inboxes.

"CRHI Going to Explode Thursday" one read. Another boasted of a public relations campaign expected to at least quadruple the share price. "Jump on board today!!!"

Many did. In the two days after the first messages about Communications Research of Ramsey, N.J., appeared, its stock went from 5 cents a share to as high as 18 cents on unusually heavy trading volume. By the end of the summer, it was back to 6 cents.

Still wondering whether spam really works?

A recent academic study examined the question and came to a pretty straightforward conclusion: It does indeed work — for those behind the e-mails.

Each week, about 730 million spam e-mails are sent, with about 110 million of those pushing penny stocks, according to the study.

Despite years of warnings to recipients that they should just delete the stuff, someone out there keeps buying the thinly traded stocks hyped by spam.

The study by Laura Frieder, an assistant finance professor at Purdue University, and Jonathan Zittrain, professor of Internet governance and regulation at Oxford University, found those who buy into the "pump and dump" schemes can lose as much as 8 percent of their investment in two days.

"It's hard to know whether it's a few people placing big bets or a lot of people placing small ones, but the effect is definitely there," Zittrain said in an e-mail.

The two professors examined about 300 companies that had been touted and 75,000 e-mails hyping those stocks' potential.

In most cases, the volume and share price of the stocks shot up after an e-mail campaign, allowing the spammers to sell their shares. The price then dropped once the hype ended.

Zittrain said it's likely the companies involved objected to the manipulation.

Carl Ceragno, chief executive of Communications Research, certainly did.

"We were a victim of one or two of those spam campaigns," Ceragno said. "We had a number of investigators trying to find out who was doing that to us. They never could pin it down to any one individual."
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It turns out those emails you get pumping some stock.

Terry O'Keefe Well-Known Member Administrator

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It turns out those emails you get pumping some stock.

Terry O'Keefe Well-Known Member Administrator

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