Headline courtesy of eWeek

According to various reports, including a good one from eWeek, there was (or still is) a huge stock pump-and-dump spam attack going on.

Editor’s notes: It’s been proven - you can’t win paying attention to stock spam. And for those who don’t even know what stock spam is, there is plenty to educate you here. I personally haven’t received a single piece of evidence of this purported spike - in other words, I’ve received no stock spam as of late. I’ll just thank GoDaddy for that, and move on.

If you buy the idea that a little outfit named L Computers is about to release an “8-way processing professional mobile computing design,” what do you do?

A) Throw away your Quad Core MacPro.

B) Jump for joy, as there is finally a computer available that will run Vista.

C) Call Jonathan Schwartz and ask him if he is ever going to open source Java.

D) None of the above.

Answer after the jump.

The answer is D. You buy their stock based on the spam you just received - that is, if you want a high probability of losing money.

UPDATE: Good thing too - “C” isn’t really an option.

Spam levels are up by roughly 80% over the past few months, and experts say don’t worry. It is only going to get worse.

All I can say is that I have been receiving increasing levels of stock spam, all plain text with a simple “hi” subject line. It usually comes in bundles, all promoting the same dead issue.

If it isn’t going to stop, so be it. Maybe I’ll find a gem in the rough for my portfolio.

UPDATE: And here’s that spam…

We called it yesterday and now it’s up 100%! Brand new
issue, Cana Petroleum, heading straight up!

VERY tightly held, in a booming business sector, with a
huge publicity campaign starting up, Cana Petroleum (CNPM)
is already bringing our readers huge gains. We advise you
to get in on this one as well and ride it to the top!

Symbol: CNPM
Current Price: 5.87
Projected Price: $15.40

Check the stats! Check the level 2! Imagine what this one
will do when the full force of the PR campaign hits it, in
conjunction with smashing news!

Major oil discovery? We are not permitted to say at this
point. All we can say is that this one is going to see
amazing appreciation in a very short period of time! This
is your opportunity. Win big with CNPM!

Damn stuff gets through even my ninety-four filters…

Example:

This is the break you’ve been waiting for! Spice up your
holdings with A_U_N_I and WIN!

Poor sap doesn’t even know I’ve already sold my A_U_N_I after receiving the great tip from the first twelve “sources.”

Most everyone has seen stock spam in their inbox. It is the plain text stuff that sneaks by the filters, telling you about how this or that company is about to explode in value. You check the ticker, only to find it is now on the pink sheets (and usually moved there just a few days before you recieved the spam).

The scammers know the word is out. So what do they do instead of relying on suckers to pump up their holdings so they can dump? They approach the trading companies, offering to pump up their stock in return for a fee.

I guess part of this is playing of the greed of a company CEO who went public with a dream, only to watch said dream go spiraling down the tube. The scammers risk being reported for their approaches as well, but I doubt they care too much.

BBC News reported on a new study which suggests stock spammers are actually winning at their game. Of course, everyone taking their tips make up the other side of those trades. Hint hint - someone else is losing.

It is a damn shame it is so difficult to borrow those penny stocks. 6% pops on two day short covers would be a great little meal ticket.

A paper was just released that analyzes the effect stock spam has on the financial markets.

The abstract says that stock spam does effect trading, at least in the short term. Uh, isn’t that the point of stock spam - get the suckers interested in the stock so the spammer can dump it on them? Common sense would tell you that if you send out enough spam mentioning a stock that has an average daily trading volume of 10 shares, the activity is bound to go up. Now we know it with empirical certainty.

The positive - we didn’t need a research grant to show us that trading on spam is a great way to lose money.

It is all about the money. And of course, the distribution. We know phishers chase the cold hard cash, so why shouldn’t their slightly less sneaking pure-spam brethren?

You have mortgages, pharma and porn as the norm, but what was once a big deal coming across the fax, is growing again in popularity across the web. Yes, spam-based stock scams are again on the rise.

Could this be a new leading indicator that the stock market is headed north once again?