SEC Kicks Off ‘Operation Spamalot’

    March 9, 2007
    WebProNews Staff

The Securities and Exchange Commission suspended securities trading of 35 companies yesterday for their spammy ways. Entitled "Operation Spamalot," the SEC is targeting these companies because of artificial inflation of stock prices caused by spam campaigns.

Intended to protect investors from potentially fraudulent claims in the so-called "stock spam" hyping up small for-pennies stocks. The SEC estimates that 100 million emails are sent out weekly with subject lines like "Ready to Explode," "Ride the Bull," and "Fast Money."

Each time a wave of these goes out, it triggers "dramatic" spikes in share price and trading volume for a short time before, ultimately, crashing back down in a market correction.

 "When spam clogs our mailboxes, it’s annoying. When it rips off investors, it’s illegal and destructive," said SEC Chairman Christopher Cox. "Today’s trading suspensions, and actions that will follow, should send a clear message to spammers: the SEC will hold you accountable."

An example of a spam campaign in question regareded a company called Healtheuniverse, Inc. (HLUN), that launched on September 4 of last year. The emails included a press release stating the company was devoted to "being the first to commercialize stem cell applications in the $15 billion worldwide plastic surgery and cosmetic surgery market."

The price of HLUN stock shot up from 12 cents to 22 cents per share by September 11, with over 2.2 million shares trading hands. By September 22, the closing price dropped back down 11 cents. Somebody made money, but wasn’t those that invested in the stock.

The SEC provides 19 pages worth of examples of these spam campaigns and lists the companies that have been suspended from trading as: 

Advanced Powerline Technologies Inc. (APWL), America Asia Petroleum Corp. (AAPM), Amerossi Int’l Group, Inc. (AMSN), Apparel Manufacturing Associates, Inc. (APPM), Asgard Holdings Inc. (AGHG), Biogenerics Ltd. (BIGN), China Gold Corp. (CGDC), CTR Investments & Consulting, Inc. (CIVX), DC Brands International, Inc. (DCBI), Equal Trading, Inc. (EQTD), Equitable Mining Corp. (EQBM), Espion International, Inc. (EPLJ), Goldmark Industries, Inc. (GDKI), GroFeed Inc. (GFDI), Healtheuniverse, Inc. (HLUN), Interlink Global Corp. (ILKG), Investigative Services Agencies, Inc. (IVAY), iPackets International, Inc. (IPKL), Koko Petroleum Inc. (KKPT), Leatt Corporation (LEAT), LOM Logistics, Inc. (LOMJ), Modern Energy Corp. (MODR), National Healthcare Logistics, Inc. (NHLG), Presidents Financial Corp. (PZFC), Red Truck Entertainment Inc. (RTRK), Relay Capital Corp. (RLYC), Rodedawg International Industries, Inc. (RWGI), Rouchon Industries, Inc. (RCHN), Software Effective Solutions Corp. (SFWJ), Solucorp Industries Ltd. (SLUP), Inc. (SSUF), UBA Technology, Inc. (UBTG), Wataire Industries Inc. (WTAF), WayPoint Biomedical Holdings, Inc. (WYPH), and Wineco Productions Inc. (WNCP).

They will be suspended until noon on March 21, 2007.

"Many of these companies are no doubt familiar to anyone who reads their email," said Linda Chatman Thomsen, Director of the SEC’s Enforcement Division, "because each has been the subject of a spam email campaign. While the Commission cautions investors not to make investment decisions based on anonymous emails they receive, we are also committed to tracking down those who prey on investors with false or misleading information."

The folks at Gmail seemed especially pleased by the event. "Stock spam is a particularly nasty problem because it is particularly difficult to find the perpetrators," said anti-spam engineer Brad Taylor, "and its after-effects can be so devastating to individual investors who’ve been lured in. These spammers are often the most creative too, and we’ve put many person-years of effort into keeping up with their latest tricks."

Taylor admits this is not "a magic bullet," but it is a step in the right direction. Gmail encourages its users to make use of the "Report Spam" button above their inboxes to help combat the menace of spam. 



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