For the past few weeks, we've been discussing "spear-phishing" attacks – targeted messages that are highly personalized in their attempts to con you into clicking on their link. This week, we will discuss variations on the "pump-and-dump" stock scam emails.
First, some background. Pump-and-dump scams have been around for as long as there have been stock markets. In this scam, the crook buys shares of some small, low-liquidity stock. He then starts rumors that this stock is "on it's way up" and "about to explode on Monday". The rumors are often crafted to appear to be insider tips. They play on the greed and vanity of the recipients. When the victims begin to invest in the penny-stock, the price does go up - temporarily. The scammer immediately sells his shares at the inflated price. After a few days, the price returns to normal and the victims are left holding shares of a stock worth only a fraction of what they paid.
One popular version of this scam is designed to look like a misdirected email. The message starts "Hi. I hope this is your email. It was great to meet you the other day and I hope you're enjoying New York. The deal I was speaking about yesterday involves a company know as [company name]. It's already headed up..."
Another opens "Hey, girlfriend. Remember that hot stock exchange guy that I'm dating?" before dropping the fraudulent tip. In both cases, the wording of the "tip" is designed to look like it was intended for someone else and that you got the message because the sender mistyped the email address. In fact, these are mass-mailed spam.
You can read more about this particular scam at www.nasd.com.
Never respond to an unexpected message and never follow the advice of a spammer. It doesn't matter how good the alleged tip looks. If you're going to invest in the market, do your homework. Invest in companies with good fundamentals whose business you understand. Don't invest on "momentum" or insider tips.