US stock market regulators have suspended trading in 35 companies implicated in 'pump and dump' email investment scams.
An estimated £500 million ($1.23 million) a year is stolen by pump and dump spammers who falsely offer get-rich-quick investments in small firms. Companies repeatedly touted in the spam emails have had their trading halted.
Operation Spamalot, launched last week in the US by the Securities and Exchange Commission (SEC), aims to crack down on what SEC chairman Christopher Cox called "one of the worst menaces of the information age".
Trading in the firms involved, none of which is a household name, has been frozen for 10 days. If the SEC cannot then prove a firm's involvement in pump and dump, the ban will be lifted.
Industry commentators have pointed out that the firms may simply have been picked by scammers who buy up cheap stocks, send spam to fuel interest and drive up the price, and dump their shares as soon as prices rise.
However, SEC officials said that there was sufficient evidence of misinformation being distributed about the 35 firms to warrant a trading ban.
Among the firms whose shares are suspended are Advanced Powerline Technologies, America Asia Petroleum and Software Effective Solutions.
The launch of Operation Spamalot comes just days after the SEC won an emergency court order to freeze the assets of a Latvia-based bank, following an investigation into pump and dump.
"When spam clogs our mailboxes, it's annoying. When it rips off investors, it's illegal and destructive," said Cox.
Operation Spamalot launches
By Jane Hoskyn on Mar 12, 2007 9:57AM