Have you received a hot stock tip, perhaps from a friendly e-mail address, recommending you get in on the ground floor of a little U.S. convenience store company that is expanding into Puerto Rico? You're not the only one. Not even close.
Over the past two days, more than a half a billion e-mails have landed in inboxes around the world touting obscure little Prime Time Group Inc. of Branson, Mo., according to transmissions tracked by international Internet security consulting firm Sophos Inc. That makes Prime Time the subject of perhaps the most widespread Internet e-mail stock-pumping scam in history.
“What was unusual about this campaign, that is different from previous campaigns, is the sheer volume,” said Ron O'Brien, senior security analyst at Sophos's U.S. headquarters in Burlington, Mass. He said previous e-mail stock-pumping campaigns have typically only reached “in the millions” of messages.
The Prime Time message alone created a 30-per-cent surge in global spam traffic over a 24-hour period, Sophos reported.
And the campaign seems to have had the desired effect. Prime Time's stock, which trades on the penny-stock Nasdaq Pink Sheets under the symbol PRTH, was at 9 cents (U.S.) Wednesday, almost double its level of a week ago. Trading volume this week has been roughly double the stock's 12-month average.
Officials at Prime Time Group didn't return phone calls Wednesday requesting comment.
It's unknown who perpetrated the spam campaign. However, the people who run such scams are typically opportunistic investors looking to create a buzz to artificially inflate a stock's value, so they can sell out at the top before the bubble of false publicity bursts.
The volume of trading generated by the campaign can often serve as an effective smokescreen, obscuring the trading activity of the perpetrators and making them harder to trace.
“This kind of stock manipulation is illegal,” Mr. O'Brien said. Sophos has contacted Missouri state officials, alerting them to the campaign.
Up until recently, Prime Time has been a quiet little operator of a handful of convenience stores in Missouri, as well as other businesses including the marketing of wireless products. In June, the company struck a deal to buy Puerto Rico 7 Inc., which owns the regional rights to the 7-Eleven franchise for Puerto Rico. Puerto Rico 7 currently operates 14 stores in the U.S. territory, but Prime Time has said it believes more than 100 stores could be developed across the Caribbean island.
The spammers pushed the Puerto Rican expansion angle in their e-mail.
“Imagine you had the chance to buy a Wal-Mart franchise in Mexico right when it first opened its doors there, and all you needed was a small stake to get in,” the e-mail trumpets, all in capital letters. “Hurry, we see this stock starting to make the turn NOW,” it continues. “Big watch in effect for August 8, 2007!!!!!!”
The spammed message was sent as a PDF file attachment, an increasingly popular means of spamming because it helps the message evade some anti-spam filters. It was spread quickly by hackers using “compromised” home PCs of unsuspecting e-mail recipients, Sophos said.
The firm said e-mail stock scams now account for roughly one-quarter of all spam, up from less than 1 per cent at the beginning of 2005.
In March, the U.S. Securities and Exchange Commission temporarily suspended trading in 35 Pink Sheet-listed companies whose securities had been the subject of “recent and repeated spam e-mail campaigns” as part of an SEC crackdown code-named “Operation Spamalot.”
