BBC News has a piece on how the rapidly increasing volume of penny stock spam appears to be affecting stock prices. Ironically (or perhaps predictably, I'm not sure—probably both), the profits go to the spammer.
Here's how it works, according to researches at Purdue and Oxford: Penny stock spammers buy low-priced stock, then flood In boxes with spam touting the stock (stock spam accounts for up to 15% of spam). Enough people respond by purchasing the stock, which drives up the price a bit. The spammers cash out (with a typical return of 5% - 6% profit) while later buyers lose (up to 8% of their purchase within two days—not counting whatever transaction fees they also paid).
Is capitalism great, or what?
[via Boing Boing]Posted by johndanseven at August 30, 2006 12:02 PM | TrackBack