Stock Touting, Image Spam, and the Russian Botnet Problem

While the financial media hasn’t really paid this story the attention it deserves, one of the more important technology finance stories in 2006 may yet turn out to be botnet stock spam. Estimates vary, but it is possible that as much as half of the current explosion in email spam — it’s up more than 50% just in the last few months — is driven by Russian botnets (networks of hijacked personal computers sending spam) touting illiquid penny stocks.

Why do it? Because it works, but those studies from earlier this year are already dated. Spammer techniques have moved on, with there being ample reason to expect that the success rate of individual stock spam messages is increasing as spammers improve their techniques. Where a year ago they relied mostly on text spam,  now spammers are embedding images in spam, greatly increasing the likelihood their messages get through.

For more check the following:

Related posts:

  1. New Comment-Spam URLs Mutating
  2. The changing economics of spam
  3. Spam is (Getting) Solved
  4. How About RSS Ego-Spam?
  5. Zen-Style Comment Spam: A Scorched Search Engine Strategy?

Comments

  1. Hi, Paul. Ironically enough, stock spam was a major part of my keynote speach at the PIPEs Conference in New York a couple of weeks ago (“How to Run Investor Relations In A Web 2.0 World”).
    True, the numbers show that stock spam works the day after touting begins but the 5.9% gain is peanuts compared to the 80% loss suffered in the weeks and months following. Unfortunately, the spammers are long gone by that point.
    An even bigger problem is the number of companies that are taken by such scams. Specifically, I have first-hand knowledge of 3 instances over the last 9 months in which each company have given up $250,000 in cash and/or free-trading stock, only to have the “silver bullet” promoter walk away and never be heard from again.
    The ingenious part – from the promoters point of view – is that companies can’t complain to regulators because they shouldn’t have been engaging in such practices to begin with.
    Do I feel sorry for individuals that buy stock due to spam, or companies that get taken by such promoters? No. There are rare exceptions when people genuinely believe they are doing the right thing but 99% of victims should know better – and this probably explains why the SEC hasn’t been doing much about it.
    At the end of the day, legitimate small-cap companies are also being hurt by the brush that paints all of them as pump and dump stocks.
    The solution? We are positioning AGORACOM as “The Small-Cap Epicenter” by showcasing small and micro-cap companies with real fundamentals and a real business plan. They are still risky but – for investors that like penny stocks – they provide a legitimate shot at big gains.
    To date, we have more than 50 companies paying us $3,000 – $6,000/month + stock options, so we’re on our way.
    Best,
    George

  2. alan patrick says:

    Hi
    Nice site.
    I wrote a similar story this morning and linked to you afterwards when I saw your site, but it seemed not to trackback, so here is my link here
    Essentially, I think the economocs of Spam are just too good, so the advertising industry will go down the route as far as public resistance (repugnance) will allow.
    Incidently, did you see the AllAdvantage resurrection Agloco, spam-bribery is here :)

  3. Justin Cook says:

    I honestly can’t imagine this Spam technique lasting long. I read last week that a company called Borderware has built anti-image-spam functionality into their spam firewall, and I’m sure other companies will follow suit.