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back to article Pump-and-dump scammers issue German prospectus

The fraudsters behind pump-and-dump stock spams are trying a new technique in a bid to fool spam filters. Junk mails promoting worthless stocks seen this week are appearing with an attached PDF file. Typically titled "German Stock Insider", these PDF files purport to offer insider tips and contain more detail than is generally …

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Good spam filters?

I must have some pretty good filters. I've received none of these, just like they filtered out all the garbled image spam. Eudora plus Spamnix.

I did an analysis of pump&dump spam last year. In October, 60% of those were for Chinese firms sold on Chinese pink sheets. Less than five per cent were on US pink sheets. About 5-7% of the total spam I received was via fax, which accounted for about 30% of my total junk faxes. I've got lots more vacation offers.

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Can you profit from a pump-and-dump?

Presumably those duped by pump-and-dumps are oblivious to the stocks' collapse until the scammers have sold out.

But given that we're tipped off to the pumped companies via the spam, couldn't someone buy up stock in one of these companies at the low price then sell before it crashes?

Would that work?

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Dan

The spammers are hoping for that...

They buy their stock first, or get it from the company for some real or imagined service (e.g. 'marketing' or PR); *then* send the spams, and are poised to sell as soon as it climbs - depends on the stock but often they'll be dumping at anything over 10%-20% rise, and they're trying to sell while it's still rising (far easier!).

The idea is that punters see it rising, think it's for real, buy more (which helps the price rise more)... and then no one else is taken in by the spam, and the party stops within a day or so.

If these are sparsely traded penny shares, or on an unregulated market like the Pink Sheets (like Ofex but worse, basically a private market) they'll maybe do 100x their normal volume for a few days and then revert to nothing, so you risk having real trouble even finding a buyer, still less at a profit.

Don't be fooled. If anyone really knew of a sure money-making opportunity, they wouldn't be shouting it on millions of emails... unless that IS the opportunity.

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Anonymous Coward

Re: Can you profit from a pump-and-dump?

I got one a few months back plugging Patientline (the only Uk based victim I know of). The price did jump soon after and stayed high long enough for me to have profited if I'd moved fast enough. I only found out too late to take advantage.

Pump and Dump doesn't help the victim company though. So there's no way I'd get involved.

All my Pump and Dump spam lately are in German. No pdf attachments yet though.

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Re: Can you profit from a pump-and-dump?

I remember reading a paper about this recently, where some students analysed the performance of these pumped stocks (I think I saw the article @ SANS?)

While some might think that it's worth a punt, these are penny-stocks that are being traded. Say, you buy a few thousand £££'s worth. The paper concluded that even if you knew exactly the right time to sell them, then you weren't likely to see a hell of a lot of return on that - most likely considerably less than 10%.

There's the downside - the scammers know at what point they are going to dump the shares. You don't. Too risky was their conclusion, and certainly not worth it financially.

http://news.bbc.co.uk/1/hi/technology/5284618.stm

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Re: Can you profit from a pump-and-dump?

Rather risky. When you receive the email, you don't know where you are in the chain - yes, you might be able to get in before everyone else, but equally you might have received the email later than everyone else and buy just before it plummets.

If you tried it over a number of scams, I suspect it would average out to a loss - rather like gambling. The house (in this case the scammers, who got in before sending the email) always wins.

To tell the truth, I rather suspect the only people being pulled in to these scams now are people who recognise that it is a scam, but like you think that they can beat the system. A typical con, actually. After all, do you really think people genuinely believe the image-based stock tipoffs?

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