A US couple has been accused by US federal regulators of making $1m through a so-called stock market pump-and-dump scam.
Jeffrey Stone and his wife Janette Diller Stone of Connecticut have had civil fraud charges filed against them by the Securities and Exchange Commission (SEC).
The couple are accused of buying 288 million WebSky shares in September 2004, and weeks later making $1m after artificially inflating the stock price through a fraudulent spam campaign.
The SEC stated that spam emails sent by the Stones claimed that WebSky would have an annual revenue of more than $40m because of a successful venture in Argentina. In reality WebSky was a start-up company with no revenues.
The emails caused the firm's stock price to rise by more than 300 per cent, according to the SEC, with 234 million shares being traded.
WebSky had forbidden the Stones from sending the emails, and told them that the Argentinean deal was not viable.
"Pump-and-dump stock campaigns work by spammers purchasing stock at a cheap price and then artificially inflating its price by encouraging others to purchase more, often by spamming 'good news' about the company to others," said Graham Cluley, senior technology consultant at Sophos.
"Stock spam is becoming increasingly attractive to internet criminals because of the large amounts of money that can be generated.
"Private investors need to be wary of believing financial advice they receive in their inbox because it could be designed purely to benefit the criminals who spammed it out."
Sophos reported that pump-and-dump stock campaigns account for approximately 15 per cent of all spam.
Charges were also brought against WebSky chief executive Douglas Haffner for selling stock to the Stones in a subsequent deal without registering the sale or obtaining an exemption from registration, according to the SEC.
Without admitting or denying the action, Haffner and WebSky settled by agreeing to surrender the $35,000 gained from the sale and to a permanent injunction against violations of the registration provisions of federal securities laws, the SEC reported.
"The SEC is holding officers of micro-cap companies accountable if they improperly sell shares, as they may be fuelling the 'pump-and-dump' craze," added Cluley.
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