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Keep a Careful Eye-Out For The Latest UK Share Spam Email

Most of us in the UK have, at one point or another, received a spam email. Unpleasant as they are, in most cases we simply hit the ‘delete’ button and the message has gone forever. But what would you do if you received an email giving you a hot tip on stock traded on the stock exchange? Would you delete it the same way as you would the spam email? If not, you should do.

Keep a Careful Eye-Out For The Latest UK Share Spam EmailEmails supposedly giving investors a hot inside tip on a previously unknown share have become the latest way for spammers to earn of few pounds. Essentially what happens is that the spammer will buy up some stock in a fairly obscure and previously unheard of company and will then spam thousand, if not millions, of known share investors emails giving them an inside scope that the company is about to be taken over.

Eager to make a quick buck, UK investors will then instruct their broker to buy the shares they have been given the tip on. With more demand (buyers) and less supply (shares), eventually the stock is going to go up. With the stock going up fueling the fire that something is going on, more investors might be tempted to purchase the stock in questions. Which itself will cause the stock price to rise. At some point the original spam emailer will then sell his stock at a huge profit knowing full well that nothing more than his spam hot inside tip email is happening with that company, thereby making a fortune.

Eventually either the company will come out and say nothing is going on or investors will quickly realise nothing is happening and the stock will fall again. Depending on exactly when you bought into the shares will depend on how much of a loss you take.

If this all sounds a little far fetched or too simple, Sophos, the Internet security company, say that emails falsely hyping stock now accounts for approximately 15% of all spam emails in the UK. This is up from an estimated 0.8% only last year!

Known as ‘Pump-and-pump’ spammers, the UK Financial Services Authority (FSA) says that no British stock has been the victim of a spam email. However, the FSA acknowledges that a number of UK investors have been burnt on US stock as a result of pump-and-pump spam emails. So make sure you keep a careful eye-out for any potental spam email and always remember that if something looks too good to be true, then it probably is.

Richard Smith
2nd October 2006

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