Stock-related spam floods e-mail boxes

Pumping up highly volatile share prices in small companies with a barrage of bullish e-mails is the latest get-rich-quick scam deployed by e-mail spammers.

According to spam-detection specialists ClearSwift, the number of spammed stock tips has risen more than 300 percent between December and March, meaning thousands of bogus investment tips are filling in-boxes daily on a variety of obscure firms listed on bourses around the world.

While stock-related spam ranks well below the torrent of unsolicited offers for sexual aids and pornography, the volume has increased dramatically from six months ago when the phenomenon first caught the attention of security professionals.

"The spammers are looking at a new angle to cash in. And it's financial services," said Alyn Hockey, director of research at the UK-based ClearSwift.

"This one is a new approach. People might not suspect this is another scam in the offing," he added.

Using the Internet to publish bogus stock recommendations is nothing new. During the height of the technology boom people used Internet message boards and chat areas dedicated to the stock market to tout various shares.

'Boiler room' tactic
But with the rise of spam it brings the so-called "boiler room" tactic of pumping and dumping stocks to a wider potential audience, security and financial experts said.

A spokesman for the UK's Financial Services Authority said he was not aware of complaints arising from spam stock tips, but he added the agency has been issuing warnings that would-be fraudsters have been turning to e-mail with greater regularity.

According to the Anti-Phishing Working Group, a year-old industry trade group comprising retailers and financial institutions, so-called "phishing" scams in which bogus emails are sent to random Internet users seeking to swipe their bank details has a five percent success ratio.

The stock e-mails are less sophisticated, but with unsuspecting e-mail users continuing to fall prey to a variety of low-level scams daily, spam watchers suspect this scam will rise significantly in the coming months with investor enthusiasm on the rise.

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"The typical victim maybe inherited a bundle of money from a relative and they're looking to make another quick return," said Paul Wood, an analyst with MessageLabs, a UK-based e-mail security firm.

Profiling the spammers, as always, is a much more difficult task. Many can be traced back to countries with lax or no financial disclosure laws such as South America or eastern Europe, said Hockey.

A recent unsolicited e-mail tip received by Reuters spoke of a new business alliance for a small cartoon animation company based in New York that should "boost shares in the short term."

Another more mysteriously stated a Phoenix-based company's stock was set for a rebound after the shares were "shorted (sold) from $0.70 all the way down to $0.29."

"MAJOR breaking news is expected in the next few days. The shorters will be forced to cover," the e-mail reads.

Hockey said the typical fictional investment e-mail newsletter carries the tell-tale signs it's spam, including jibberish words to fool corporate spam filters.

"And all the stocks they tout seem to have that high-tech, new media buzz to them," he said.