Sometimes referred to as junk e-mail or bulk e-mail, a spam covers all unwelcome email that is being sent to loads of email addresses. Spam mails usually endorse a product, business or service. Stock spam is an email that would typically come from an unknown sender who attempts to sell penny stocks that would supposedly produce profits without any risks at all.



Who sends these?

Most of the time, people who send these spam mails are people unidentified strangers who will encourage you to purchase penny stocks from a new company which may have released a promising product. There are some instances when the spam mail would come from a self-proclaimed penny stocks analyst or a supposed newsletter publisher. These suspicious personas would then claim that they are willing to share their success with you.

The Internet can be considered a spammer's ideal playing field. Different tricks and techniques may be applied to spam millions of people around the world, without the risk of being traced and identified.

Known Penny Stock Scams Frequently, a penny stock fraud employs a Pump and Dump system. A supposedly credible press release will be featured in the company's official website. The next step would be the rapid e-mailing of newsletters. These newsletters main schema would be to convince a receiver to invest in penny stocks from their company. Massive effort is applied in this process as the advocate emails all potential investors.

Promoters commonly go to message boards, post about it in famous forums, or dwell in a populated chat room and try their best to convince you buy their penny stocks. Once an investor starts buying the stocks, demand will go up and the stock's price will increase. Once the price reaches its apex, the scammers sell all of their shares, which will eventually make the stock's price fall down promptly.

The scammed investors will be left with valueless, low priced stocks. After the whole procedure, the promotion of the said stock will halt, making it look as if the whole event did not take place at all.

Another identified penny stocks scam is Front Running. Front running happens when insiders or brokers buy stocks in the knowledge of what to come even before the reports are made publicly available.

The opposite model of the Pump and Dump scheme is known as the Poop and Scoop method.

Scammers begin the scheme by scattering pessimistic rumors about a certain penny stocks company; the result will be panic and paranoia among the shareholders, making them sell their shares promptly. After the negative news has lowered the prices, scammers will immediately buy the stocks at a very low price, the negative rumors stop and prices will go back to its regular status, which means instant and effortless income for the scammers.

Circular trading is a penny stocks fraud scheme that uses multiple accounts and trades the similar stocks in a repeated circular activity between the accounts. This action will eventually make it look like the shares have a lot of activity. Optimistic investors instantaneously buy them making the stock's value rise. Again, when the climax is reached, scammers suddenly sell their shares and earn effortlessly while the investors are left with the burden of low priced stocks.

The internet has the capacity of disseminating multiple unconfirmed rumors, e-mail spamming, chat room sessions and forum activity; this ability has set the internet as a perfect breeding place for penny stocks fraud. The next time you receive a spam mail from a suspicious penny stockbroker or an ordinary person who wants to share their luck in penny stocks that is supposed to be a treasure, always remember that once a real treasure is found, it is unlikely that it will be shared with other people.