Pump-and-dump spam-scam works

Jonathan Zittrain and Laura Frieder have studied over 75,000 pump-and-dump stock-scam emails and determined that they actually produce a pretty good return — for the spammer.

People who respond to the "pump and dump" scam can lose 8% of their investment in two days.

Conversely, the spammers who buy low-priced stock before sending the e-mails, typically see a return of between 4.9% and 6% when they sell.

I figured that this was true when the number of stock-scam emails in my in-box doubled and redoubled and re-re-doubled. There are so many spammers running this scam right now that I'm filtering thousands of these every day, and a couple dozen make it through the filter on top of that.


(via Kottke)

Update: David sez, "A fellow on the CISSP mailing list set up a simulation of a portfolio whose strategy was simply, sell short every stock he got a spam about. He 'made' $8K in two weeks."

Update 2: Joshua sez, "I run the spam stock tracker site you listed on boing boing last October. Just got the following email today. Basically it is offering to affect stock price for a fee or a cut of the action. It is the first time I have seen such an offer, and I got it 3 times in just a couple hours. There is a lot of speculation regarding who spams and why, but one thing certainly affecting the volume of spam is the ease at which anyone can trigger the flood of spam, and seemingly do it risk free based on the offer in the email."