Spam that contains fraudulent stock information has been proven to influence the financial markets, German researchers have found.
So-called "pump-and-dump" scams, where spammers send out false stock information to encourage people to buy shares, were found to both increase the traded volume and artificially boost the share price, said researchers from the Technische Universitat Dresden this week.
In a typical case, share prices increase by around 500 percent, the researchers claimed.
Three groups of people are involved in the trading. The spammers themselves benefit by quickly selling pre-bought shares, once 'naive traders' have pushed up the share price by buying on the advice of the spam. The third group, dubbed "smart" traders, recognise that a scam is being attempted and "jump on the bandwagon" before also quickly disposing of shares, according to researcher Rainer Böhme.
"Stocks increase in value relative to the short term trend," said Böhme, speaking at the Workshop on the Economics of Information Security in Cambridge. "Pump and dump seems to work. People apparently make investment decisions based on incredible sources such as email spam," Böhme added.
The researchers used mathematical (multivariate regression) models to analyse a series of statistics. They gathered the figures by comparing Richardson’s Stock Spam Effectiveness Monitor archive with daily price quotes for the affected stocks, downloaded from Yahoo Finance.
Böhme and fellow researcher Thorsten Holz found that spammers almost exclusively trade in penny stocks, and said spammers presumably chose them because "the market impact of individual transactions is particularly high for securities with low liquidity". They found that share price was boosted by an average of 500 percent by the scams, and that there was no sign that the "trick" was losing its effectiveness.
Information-security experts from antivirus company Sophos said they had also seen evidence that stock prices rise significantly as a result of scams, and said a pump-and-dump campaign happened this week.
On Monday, spammers were encouraging users to buy stock in a cosmetics company called Southern Cosmetics, subsequently inflating its stock price, Sophos claimed.
The emails, which consisted of an embedded graphic in an attempt to avoid detection by anti-spam filters, told recipients that savvy investors would be wise to buy stock in the company because of business deals it was making with cosmetics firm Naomi LLC.
On Thursday, Southern Cosmetics warned investors to ignore the spam email, which it insisted it was not responsible for.
During the spam campaign, an examination of Southern Cosmetics' share price showed that there was a marked increase in trading in the stock. The share price rose to a high of 6.6 US cents from its pre-spam-campaign low of less than one US cent per share.
"The volume of trading on dormant stock increased dramatically," said Graham Cluley, senior technology consultant for Sophos.
"Pump and dump is a major component of the spam industry, and accounts for 15 percent of the spam we see," said Cluley. "I'm sure spammers will become more professional, and could start to include links to genuine company news," Cluley added.
Talkback
I receive a whole bunch of these stock scam spam mails every single day - I get far more of those than any other form of spam. Since I'm not in the USA nor even remotely interested in investing money I don't have, it is really annoying. I wish I knew how to remove my details from whatever list these parasites found me on. Since the USA appear to have effectively legalised spamming I guess there's very little we outside of America can do about it.
I do not live in the UK, but many of these spam stock emails are coming from outside the US which is where I do reside. Within the past 8 months I have received hundreds of these annoying emails with absolutely no interests in reading them. In fact, I am apprehensive to open them thinking that they may be someones way of hacking into my computer. I just simply send them to junk mail without opening them. My concern...HOW THE HECK DO I STOP IT? Any suggestions? Thanks, NYC
I too have been recieving irritating stock spam mail. There seems to be no way to block it as a different sender, with a thereafter non-existant address and subject title is used each time - presumably computer generated.
Where do they access email addresses from and how can they be blocked?
it is hard to block them, I am an IT Manager I have tracked a lot of spam and their origin at my company's worksite, I have noticed a lot of it are coming from Asia and Europe To help cut down on the spam I have actually blocked countries from sending emails to our domain by their IP addresses . It was a lot of work and I continue to monitor this almost every day. I do pity the end user who do not have knowledge on software that they can use to block all mail except from those they know I suggest they use hotmail and set it up to block all mail except those on their list, other ISP's provide spam programs where you can stop automated spam, the sender is required to fill a form before they can send you mail, best of luck to those who are victims to this ordeal..
I hate to tell you this, but this problem is NOT unique to the United States. We in the United States also cannot block this garbage, nor do we encourage it's origination. So those of you OUTSIDE the United States, please stop your whining. We (Americans-you know us, those people you LOVE to bash, yet depend on us to save your ASS in, let's see, virtually EVERY major war/confrontation/pissing match etc. because you don't have the gut's). don't like this stuff either. Quit whining and start blocking. And STOP blaming the USA. WE DID NOT START THIS !
I've started getting undelivered mail reports saying that I have tried to send these spam mails and that they have been rejected or that the recipients don't exist.
How have they been able to get into my account to send spam in my name when my account shows no record of having sent them?
Should I protect myself in some way against potential legal action?
I recommend closing down your email account and setting up a new one. Auto-Mailers can cause a lot of problems. Some of my clients have actually had their internet service shut down by their ISP due to being infected by Auto-Mailers. It is highly likely that you have a virus on your computer, and you may also need to format.
Sorry to be the bearer of bad news.
At least every 5-year old in the UK knows that to pluralise a word simply involves adding an S to it. One THING two THINGS. Simple, really. So take your gut's and stick them where ther Bush don't shine.