Consumer Affairs has announced their Top 10 Scams of 2006, and number 6 is the classic Pump and Dump. Consumer Affairs sites a penny stock called Texhoma Energy that was email spammed in October. Daily volume grew from 53,000 shares to more than 5 million before the stock crashed.
Aside from gullible investors, the real victims in these situations are often the underlying companies. The ValueWiki community can help prevent these scams and protect investors by immediately reporting stock spam to ValueWiki. As soon as you receive stock spam, list the company on ValueWiki’s Top 10 Stock Spam Victims and make a note on that company’s article page. This will help alert investors that a small volume stock is being manipulated.