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Operation Spamalot suspends penny stocks
By Aaron Siegel
March 8, 2007
The Securities and Exchange Commission is taking a cue from Broadway in its effort to protect investors from fraudulent spam e-mails that hype small companies' penny stocks.
The initiative, titled "Operation Spamalot," has led to the suspension the securities of 35 companies that have been the subject of recent spam e-mail campaigns.
An estimated 100 million e-mails, containing the "Ready to Explode," "Ride the Bull," and "Fast Money" messages in the subject line triggered dramatic spikes in share price and trading volume before the spamming concluded, causing investors to lose their money.
In one case, shares of Apparel Manufacturing Associates Inc. (APPM) closed at 6 cents, with a trading volume of 3,500 shares on Dec. 15.
After a weekend spamming campaign distributed e-mails proclaiming "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 484,568 shares with the price spiking to over 19 cents per share.
The price reached 45 cents on Dec. 20, before falling back to 10 cents on trading volume of 65,350 shares on Dec. 27.
The suspensions concern companies not subject to the reporting requirements of the Securities Exchange Act of 1934, which are not listed on any exchange, or on the OTC Bulletin Board.
This means that the brokers posting quotations for the purchase and sale of the securities are not required to conduct due diligence regarding the issuers.
WTAF is ONE of these companies |
