Biostem Pump and Dump Spam Helps Scammers Make Impressive Profit

Here's how a spam run can help someone make a lot of money

By on June 17th, 2013 08:15 GMT

Recent studies published by IT security firms have revealed that the old pump and dump spam is back. Security researcher Conrad Longmore has come across one spam campaign that appears to be highly lucrative for scammers.

According to the expert, someone purchased millions of shares for a company called Biostem US Corp (HAIR) when stocks were around $0.21 (€0.16).

Shortly after, a pump and dump spam campaign was launched in an effort to get as many individuals as possible to purchase stock and implicitly raise the stock price.

The price increased by only a few cents, but it was more than enough for the individuals who purchased millions of shares to make a hefty profit.

As Longmore highlights, the company isn’t doing very well.

“The CEO was recently arrested, accounts are overdue and the last reported financial position of the company was dire, so it looks like it is on its last legs. But crucially there seems to be no news of substance about the company, so we can assume that all the stock price movement is purely down to the pump and dump spam,” he explained.

It’s uncertain who is behind the spam run, but they’re not done with the campaign. According to Longmore, on June 15, the campaign was still active, possibly because some of the actors behind the spam run still had shares in the company.

“The sad fact of the matter seems to be that pump and dump does seem to have a positive effect on this sort of thinly-traded low-value share price,” Longmore said.

“But the thing is that the spammers have already taken out their positions in the target company, it is almost impossible for a normal investor to make any money out of this because as soon as the spamming starts, then the stock dumping starts as well.”

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