SEC’s “Operation Spamalot” targets e-mail scams
March 9, 2007
The US Securities and Exchange Commission has temporarily suspended trading in 35 companies who were advertising their shares via e-mail spam. Between them, someone had been sending out as many as 100 million e-mails a week that carried subject lines intended to entice people to invest in the companies. Their aim, according to the SEC, was to pump up the share prices of the stocks by encouraging people to invest and then quickly dumping their own shares while the price was artificially inflated.
The SEC did not say whether the companies in question themselves were behind the spam campaigns, and while they said they know who sent the e-mails, their identities were not made public. The shares are not traded on stock exchanges, but appear on “Pink Sheets”, an electronic service that does not investigate the backgrounds of brokers listing the stocks.
The investigation, called “Operation Spamalot” after the Broadway musical based on material by the Monty Python comedy troupe, is ongoing and the SEC said that they will continue to track down and punish those who send the e-mails, which it called “illegal and destructive”.
Trading in the 35 companies whose stock was advertised in this way have been suspended from trading for 10 days, through March 21.