The Securities and Exchange Commission Thursday halted the trading of stocks in 35 companies that the commission claims have been the subject of what are known as pump-and-dump spam campaigns.
The suspensions are part of an effort dubbed “Operation Spamalot” aimed at combating pump-and-dump spam where unsolicited e-mails arrive in people’s inboxes hyping penny stocks in an effort to drive the share price briefly up so the spammers can sell their holdings at a profit. It is estimated that 100 million pump-and-dump spams are sent each week, according to the SEC.
For example, according to the SEC, on Dec. 15 shares in Apparel Manufacturing Associates closed at 6 cents with a trading volume of 3,500 shares. After a weekend spam campaign claiming, “Huge news expected out on APPM, get in before the wire, We’re taking it all the way to $1.00,” trading volume on Dec. 18 hit 486,568 shares while the price spiked at more than 19 cents a share, according to the SEC. Two days later, the price rose to 45 cents a share, and by Dec. 27, the price plummeted back to 10 cents a share on trading volume of 65,350 shares.
“By halting trading in these stocks we are seeking to protect investors from further harm,” said Mark Schonfeld, director of the SEC's northeast regional office, in a statement.
The suspensions are for 10 business days, and will be over at 11:59 p.m. on March 21, the SEC said in a statement.
