"I hope this is your email" Scam Offers No Hope of Profits

You get an email at home or work from Tanya, or Weldon, or maybe Kristy. You open it and read some poorly-worded prose like the following (from a spam email we received):

 

"Hi I hope this is your email. I was pleased to meet you the other day. I expect you was excited about New York. So much so much happening all the time, lot of great opportunities. And speaking of opportunities, the deal I was speaking about yesterday involves a company known as…"

 

You're encouraged to get in early and buy the stock.

 

"It's already heading up, but the big news isn't even out yet, so there's still time. I have got this shares already and made 2000. I propose you do the same.  Hope this helps you out. I'll see you this weekend."

 

No, you don't have amnesia. You've never met the person who sent you the email. It's from somebody who in all likelihood is being paid to send this message to thousands of email addresses. The hope is that you and others will fall for the scam and buy shares of the recommended stock.

 

No Mistaking the Pump and Dump

 

Just as it was no mistake that you got that email in the first place, there can be no mistake that the email is likely a new twist on the old "Pump and Dump" scheme. 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 for the stock and often causing its price to soar. Fraudsters then sell off their shares (the dump), usually leaving investors with worthless, or near worthless, stock.

 

Don't Be Taken In 

 

Don't fall for the tactic that you should get in while the price is still low or pressure to invest quickly. And don't believe that the message somehow inadvertently reached you when the sender "guessed" at — or incorrectly typed in — someone else's email address. Fraudsters will use any ruse to get you to act on their touts and pitches.

 

The best way to avoid being taken in by email message scams is to ignore the message. A cardinal rule of investing is never rely solely on information you receive through an unsolicited source, be it a text message, email, fax, or phone call. Any stock spams you receive may be forwarded to FINRA at spam@finra.org.

 

How to Avoid Getting Scammed 

 

To avoid potential scams, make sure you get the information you need to make a wise investment choice.

  • Investigate before you invest. Never rely solely on information you receive in an unsolicited fax or email. It's easy for companies or their promoters to make glorified claims about new products, lucrative contracts, or the company's revenue, profits, or future stock price.

     
  • Always ask:  "Why me?"  Another tip-off that you're potentially being scammed is that the message is unsolicited, which raises the obvious question:  Why would a total stranger send you an email about a really great investment opportunity?  The answer is that there is no such opportunity for you.  In many email and fax scams, those who tout the stock are corporate insiders, paid promoters, or substantial shareholders who stand to profit handsomely if the company's stock price goes up. 

     
  • Exercise some skepticism. It can be frighteningly easy for a spammer to fake the names that appear in the "To," "From," and "Reply to" fields of an email — or to use worms or viruses to hijack the email system of a friend or colleague and send emails that appear to be from that person.  Fraudsters can just as readily "spoof" a domain name, making it appear as though the email originated from one Internet address when, in fact, it came from another — perhaps from another country. So even if you recognize a sender's name or think the email address looks legitimate, exercise skepticism. Misdirected email scams depend on your belief that the email was truly meant for you or that it at least came from a legitimate source. 

     
  • Find out where the stock trades. Most unsolicited spam recommendations involve stocks that can't meet the listing requirements of The Nasdaq Stock Market, the New York Stock Exchange, or other US stock exchanges. Instead, these stocks are usually quoted on the OTC Bulletin Board (OTCBB) or in the Pink Sheets. There are important differences between the OTCBB and the Pink Sheets and The Nasdaq Stock Market or a stock exchange.
     
    • There are no minimum quantitative standards that must be met by a company to have its securities quoted on the OTCBB or in the Pink Sheets, though OTCBB issuers must remain current in their filings with the SEC or applicable regulatory authority. Many Pink Sheet companies, on the other hand, have no obligation to file annual or quarterly reports or to publicly disclose current material information.

       
    • Many of the securities quoted on the OTCBB or in the Pink Sheets don't have a liquid market; they are infrequently traded and can move up or down in price quickly. This may make it difficult to sell your security at a later date.

       
  • Read a company's SEC filings, if available. Most public companies file reports with the SEC. Check the SEC's EDGAR database to find out whether the company files with the SEC. Read the reports and verify any information you have heard about the company. But remember that just because a company has registered its securities or has filed reports with the SEC, it doesn't mean that it will be a good investment.
     
    • Be alert to changes in the company's name and trading symbol, reported through SEC Form 8-K. Stock promoters often change a company's name and trading symbol in an apparent attempt to align it more closely with a current event or issue.

If you're suspicious about an offer or if you think the claims might be exaggerated or misleading, please contact us

 

Additional Resources

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Last Updated: 11/6/2006