Stock Spams Are Often Stock Scams
While most people find spam an
occasional annoyance, it's also becoming the main way to target individuals and
take money from them. With convincing stock tips and market advice, these scams
are luring investors into their games and making them feel as though they could
make a lot of money for almost no effort. That's why every investor needs to
know how to protect themselves.?
The definition of spam is an unsolicited
piece of information that is sent to the person's email box. Most spam emails
are sent to hundreds and thousands of recipients, hoping that one or more are
convinced by the bogus offer and give their money to the scam artist. In terms
of stock scams, these are emails that give the reader tips about stocks in an
effort to create a high enough demand for the stock that the price goes up.
During the process, the scam artist sells their own shares of the stock for a
tremendous profit (also known as the pump and dump scam).?
Many people
already have filters installed on their email boxes that will weed out the junk
emails and prevent them from being seen in many cases. However, some spam can
get through even the toughest filters by looking as though it were information
that you might have requested.?
Another scam that is the 'risk free'
scams that might guarantee that the person will reap the benefits of the
described information. While there may be some legitimacy in this kind of scam,
the investor should realize that things are never guaranteed in the realm of
stocks and other financial matters-thus probably a scam.?
Inside
information is illegal in the investment world, so any spam that might include
wording such as that is only trying to create a demand in a particular stock so
that they can reap the benefits of that false demand. This is very similar to
the pump and dump as the investor is being 'pumped' full of information that is
useless.
A more complicated spam that may be received deals with IPOs
(initial public offerings). This is when a company approaches an investor with
an opportunity to receive free stock credits (with an administrative fee) when
the company completes the IPO. However, the scam is that the later transaction
never takes place and the fees are kept.?
Any spam that might be received
offering riches and promises of great stock tips is something that an investor
should be wary of. In most cases, these are spam messages that the investor
never requested, and thus the information is probably not in that investor's
best interests.?
If an investor should be scammed in any stock
transaction, they should contact the SEC investor complaint center.
About the Author
Joel Arberman is the Managing Member of Stock Aware,
LLC. We publish a free investment research and analysis newsletter. Learn more
at http://www.StockAware.com