Gorinchem, August 21, 2006 - IT security firm Sophos has warned users to be wary of emails offering unsolicited financial advice as a married couple is charged by federal regulators with making 1 million US dollars through a stock market pump-and-dump scam.
42-year-old Jeffrey Stone and his wife Janette Diller Stone of Connecticut, USA have had civil fraud charges filed against them by the Securities and Exchange Commission (SEC). The couple is accused of buying 288 million shares of WebSky Inc in September 2004, and weeks later making 1 million US dollars after artificially inflating the stock price through a fraudulent spam campaign.
According to the SEC, spam emails sent by the Stones stated that WebSky would have an annual revenue of more than 40 million US dollars because of a successful venture in Argentina. In reality WebSky was a start-up company with no revenues. The emails caused the firm's stock price to rise by more than 300 percent, according to the SEC, with 234 million shares being traded. WebSky had forbidden the Stones from sending the emails, and told them that the Argentinean deal was not viable.
"Pump-and-dump stock campaigns work by spammers purchasing stock at a cheap price and then artificially inflating its price by encouraging others to purchase more - often by spamming "good news" about the company to others," said Graham Cluley, senior technology consultant for Sophos. "Stock spam is becoming increasingly attractive to internet criminals because of the large amounts of money that can be generated. Private investors need to be wary of believing financial advice they receive in their inbox, because it could be designed purely to benefit the criminals who spammed it out."
Sophos experts report that pump and dump stock campaigns account for approximately 15 percent of all spam.
Charges were also brought against Douglas Haffner, CEO of WebSky, for selling stock to the Stones in a subsequent deal without registering the sale or obtaining an exemption from registration, according to the SEC. Without admitting or denying the action, Haffner and WebSky settled by agreeing to surrender the 35,000 US dollars gained from the sale and to a permanent injunction against violations of the registration provisions of federal securities laws, the SEC reported.
"The SEC is holding officers of micro-cap companies accountable if they improperly sell shares, as they may be fuelling the 'pump-and-dump' craze," continued Cluley.
Sophos recommends companies protect themselves with a consolidated solution which can defend against the threats of spam and malware.
Further information can be found
here.
About Sophos Benelux
Sophos Benelux, a Sophos distributorship located in Gorinchem, is dedicated to providing Sophos solutions and services to its partners, resellers and customers in the Benelux region. Sophos is a world leader in integrated threat management solutions, developing protection against viruses, spyware, spam and policy abuse for business, education and government.
About Sophos
Sophos is a world leader in integrated threat management solutions, developing protection against viruses, spyware, spam and policy abuse for business, education and government. Sophos’s reliably-engineered, easy-to-operate products protect more than 35 million users in more than 150 countries. Through 20 years’ experience and a global network of threat analysis centers, the company responds rapidly to emerging threats – no matter how complex – and achieves the highest levels of customer satisfaction in the industry.
For more information, please contact:
Sophos
Marnix van Meer
Tel: +31 655700255
m.vanmeer(at)sophosbenelux.com
Creative Strategies
Benita Dreesen
Tel: +32 2 267 41 60
Bdreesen(at)creative-strategies.be