One of the things I’ve always wondered about e-mail spam has been — who is actually making money off this stuff, and how much? Well, an article Yahoo! News today shows that there is, in fact, serious money to be made by spamming. I’d always assumed that there had to be some profit in it, or else spammers would not keep on doing it, but this was the first time I’ve actually gotten a window into how much.
In one spam campaign involving Apparel Manufacturing Associates (APPM) the SEC said the company’s stock closed at 6 cents on trading volume of 3,500 shares on Friday, December 15, 2006.
After a weekend spam campaign distributed e-mails proclaiming “Huge news expected out on APPM, get in before the wire, We’re taking it all the way to $1.00,” trading volume on Monday, December 18, 2006, soared to 484,568 shares with the price spiking to over 19 cents a share.
Two days later the APPM price climbed to 45 cents. However, by December 27, 2006, the price had slumped to 10 cents on trading volume of 65,350 shares, the agency said.
There’s no way to know from those numbers exactly who bought and sold when, but it’s easy to see that someone who knew what was happening could easily make a five or six-figure profit in less than two weeks. Lather, rinse, repeat — and you’re doing quite well for yourself.
Fortunately, the SEC is starting to take some steps to try to reign this kind of stock manipulation in, but I suspect as long as spam and penny stocks are around, we won’t be completely free from the practice.