finra

FINRA

For Release:
Contacts:

June 12, 2013
George Smaragdis (202) 728-8988
Nancy Condon (202) 728-8379

 

 

FINRA, SEC Warn Investors: Don't Trade on Pump-And-Dump Stock Emails

WASHINGTON—The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) today issued an Investor Alert called Inbox Alert—Don't Trade on Pump-And-Dump Stock Emails warning investors of a sharp increase in email-linked to "pump-and-dump" stock schemes. 


FINRA and the SEC's joint Alert notes that the latest McAfee Threats Report confirms a steep rise in spam email linked to bogus "pump-and-dump" stock schemes designed to trick unsuspecting investors. These false claims could also be made on social media such as Facebook and Twitter, as well as on bulletin boards and chat room pages. 


"Spam email is the bait used to lure people into making bad investment decisions. No one should ever make an investment based on the advice of an unsolicited email," said Cameron Funkhouser, Executive Vice President of FINRA's Office of Fraud Detection and Market Intelligence.


"Investors should always be wary of unsolicited investment offers in the form of an e-mail from a stranger," said Lori Schock, Director of the SEC's Office of Investor Education and Advocacy. "The best response to investment spam is to hit delete."


Pump-and-dump promoters frequently claim to have "inside" information about an impending development. Others may say they use an "infallible" system that uses a combination of economic and stock market data to pick stocks. These scams are the "inbox" equivalent of a boiler room sales operation, hounding investors with potentially false information about a company. 


The fraudsters behind these scams stand to gain by selling their shares after the stock price is "pumped" up by the buying frenzy they create through the mass email push. Once these fraudsters "dump" their shares by selling them and stop hyping the stock, investors lose their money or are left with worthless, or near worthless, stock.


FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business—from registering and educating all industry participants to examining securities firms, writing and enforcing rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our website at www.finra.org.