Sunday, July 30, 2006

Buy high, sell low...

If you have an e-mail account, you've probably gotten on someone's list for stock tips. An unnamed person has sent you information about a very small company, and its stock is about to jump. Oddly, sometimes the same stock is mentioned in a couple of different e-mails.

I always figured something was up, but couldn't figure out the complete story. That led me to an investigation, and the discovery that the complete story doesn't really matter.

Today I received a couple of notes on the Ever-Glory International Group. I did a search on it, and I was taken to a page on the scam known as "Pump and Dump." Scammers hope to encourage some people to buy stock in a company, which will drive the price up a bit and give them a seller. Then the stock returns to normal, and the e-mail recipient is stuck with the stock.

The SEC doesn't know who might be behind a particular effort. According to the site, it could be someone in the company itself, someone with a connection to the company, or someone with no connection to the company. It's interesting that there is no bad Web site to visit, which is often the case with other spams.

Someone looked into Ever-Glory. Surprise! The stock dropped 16 percent just after one spam burst.

I realize my many loyal readers are much too smart to fall for something like this. But that doesn't mean they don't like to see how such matters operate. I'm sticking to the blue chips, thank you.

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