If you’re anything like me, not a day goes by without receiving at least one stock tip via email. I’ve had days where I receive upwards of twenty of them within only a few minutes.

The point of the email is to convince you that this stock is so hot that you’d be stupid not to buy in. Since most sell for pennies a share, those people looking to get rich quick and cash in on easy profits snap up shares quickly.

As thousands of people buy shares, they push the stock price higher. When the price spikes (even just a few cents), the spammer - who owns a large amount of this stock - sells it off, leaving you with shares of virtually worthless stock.

Thursday, the SEC took action to punish the stocks that profit from these spammers by suspending trading of 35 companies that are frequently promoted in these types of emails for the next 10 days.

According to the SEC, 100 million spam emails are sent each week - and as much as a third push stock tips. If the SEC can stay on top of this type of spam monitoring and suspend company trading as soon as they see evidence that this is happening, perhaps they’ll be able to curb the problem.

Still, it’s a difficult task. There are so many people out there looking for “the next big opportunity” that the SEC have to act extremely quickly - something that the government isn’t known to do well - to stop these scams before they get off the ground. At least it’s a start.

Source: SEC Cracks Down on Stock Spammers