NASD has warned of a new “pump and dump” scheme aimed at investors through misaddressed personal emails.
The NASD says e-mails are usually poorly written and seem to be sent to a personal acquaintance.
“Don’t be fooled – the email is almost certainly from someone who’s being paid to send it to thousands of people, in hopes that some of them will fall for the scam and buy shares of the recommended stock,” says Elisse Walter, senior executive vice president of NASD. “The best way to avoid being taken in is to ignore the email entirely. And a cardinal rule of investing is to never rely solely on information you receive from an unsolicited source – whether it’s in the form of an email, a fax, a text message or a phone call.”
The pump: fraudsters recommend false statements about company stock and mislead the investor into buying the stock, which causes the stock’s price to soar. The dump: the fraudsters sell their stock at the inflated price, which leaves investors with near worthless stock.