NASD Warns Investors Over Mis-Addressed E-Mail Scam

by Glen Shapiro, LawAndTax-News.com, New York

08 November 2006

The National Association of Securities Dealers on Monday warned investors about the latest twist in an age-old scam: targeting gullible investors through apparently misaddressed personal emails to lure them into fraudulent 'pump and dump' schemes.

A new NASD Investor Alert includes examples of emails that fraudsters have used to entice investors. Typically, they are poorly worded and appear to have reached the investor's email inbox in error - as if the sender had mistyped some personal acquaintance's email address.

However, NASD Senior Executive Vice President Elisse Walter explained:

"Don't be fooled - the email is almost certainly from someone who's being paid to send it to thousands of people, in hopes that some of them will fall for the scam and buy shares of the recommended stock."

"The best way to avoid being taken in is to ignore the email entirely. And a cardinal rule of investing is to never rely solely on information you receive from an unsolicited source - whether it's in the form of an email, a fax, a text message or a phone call."

Pump and dump scams involve the recommendation of a company's stock through false and misleading statements (the pump). Misled investors then buy the stock, creating demand that often causes the stock's price to soar. Then the fraudsters sell off their shares at the artificially inflated price (the dump), usually leaving the investors they duped with worthless, or near worthless, stock.

Recommended