'Pump and dump' scam hits German stock exchange

First widespread campaign outside the US

False 'good news' about stock is spread via spam

The first 'pump and dump' spam campaign has hit Europe this week, designed to manipulate the share price of a company listed on the German stock exchange, according to security vendor Sophos.

The campaigns are designed to artificially inflate the price of a particular stock by sending out spam that encourages people to buy it, before selling the shares at a high price causing it to collapse.

'This is the first time we have seen a widespread spam campaign trying to influence a stock market based outside of the US,' said Graham Cluley, senior technology consultant at Sophos.

'With pump-and-dump, there is a real danger that armchair traders may be fooled into investing in such firms for bogus reasons. It will be interesting to see if stock scammers, who have plagued North American-listed penny stocks for some time, will now turn more of their attention to overseas markets.'

Sophos's Security Threat Report 2007 revealed that pump-and-dump stock campaigns accounted for approximately 25 per cent of all spam last year, up from 0.8 per cent in January 2005.

Earlier this month, the US Securities and Exchange Commission (SEC) had suspended trading in 35 companies that were found to be commonly referenced in pump-and-dump stock email campaigns.