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Last Updated: Friday, 9 March 2007, 11:00 GMT
US crackdown on market spammers
Computer user
The spam e-mails caused spikes in the value of shares
US market regulators have suspended trading in 35 companies that allegedly benefited from spam e-mail campaigns hyping up their stock.

The Securities and Exchange Commission (SEC) said it had taken the action as part of a crackdown against market manipulators using fraudulent e-mails.

Messages with phrases such as "Ride the Bull" and "Fast Money" encouraged investors to buy stock in the firms.

After causing a spike in the shares, fraudsters would then sell their stock.

Following the brief surge, the value of the inflated stock would invariably fall - costing duped investors dearly.

When spam clogs our mailboxes, it's annoying - when it rips off investors, it's illegal and destructive
Christopher Cox, SEC chairman

About 100 million of the spam e-mails were sent out each week.

The SEC said the suspensions, announced on Thursday, were part of its "Operation Spamalot" campaign to protect investors from potentially fraudulent spam e-mails.

'Clear message'

SEC officials cited the example of Apparel Manufacturing Associates, whose shares closed at 6 cents, on trading volume of 3,500 shares, on Friday, 15 December.

Following a weekend e-mail spam campaign proclaiming "huge news expected out on APPM, get in before the wire", trading on the following Monday reached 484,568 shares, pushing the stock to more than 19 cents a share.

Two days later, the stock hit 45 cents a share. But by 27 December, Apparel Manufacturing's stock was down to just 10 cents on volume of 65,350 shares.

"When spam clogs our mailboxes, it's annoying. When it rips off investors, it's illegal and destructive," said SEC chairman Christopher Cox.

"Today's trading suspensions, and actions that will follow, should send a clear message to spammers - the SEC will hold you accountable."

Officials said they were attempting to identify the people behind the spam e-mail schemes.

Shares in the 35 suspended firms - which are not traded on stock exchanges - are listed instead on the so-called Pink Sheets electronic quotation service, which does not require brokers to investigate the background of the companies.

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