TELECOM Digest OnLine - Sorted: NASD Warns of Fake Stock Tips in CellPhone Scam

NASD Warns of Fake Stock Tips in CellPhone Scam

Reuters News Wire (reuters@telecom-digest.org)
Tue, 13 Dec 2005 18:32:23 -0600

Brokerage regulator NASD on Tuesday warned investors against reacting
to stock tips sent in unsolicited mobile phone text messages, as spam
schemes aimed at hyping share prices move beyond e-mail and onto
cellphones.

The so-called "pump and dump" schemes involve spam messages with false
recommendations of a company's stock that lead the share price to
rise. Fraudsters can then sell their shares, leaving investors with
worthless stock, the regulator said.

There have been relatively few cases of illegal spamming to
U.S. cellphones and investor-focused spam schemes have been more
common in e-mail to date.

But the number of texts urging recipients to invest immediately in a
particular stock has recently increased to the point that there were
enough for NASD to take notice, said John Gannon, its vice president
of investor education.

"We determined there were sufficient messages coming in that it needed
to be brought to investors' attention," said Gannon, who did not
reveal the quantity of spam messages or say which stocks had been
involved.

Gannon said these schemes do not generally involve brokers, but NASD
would refer any fraudulent text messaging cases it identified to the
U.S. Securities and Exchange Commission.

Copyright 2005 Reuters Limited.

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