An estimated 15% of all spam sent is of the “pump and dump” variety. These spams hype penny stocks in an attempt to temporarily raise their value so the spammers, who typically own the stocks themselves, can sell them for a profit. A return of up to 6% can be had.

          “This is basic lying, cheating and stealing and the message to anyone engaging in these shenanigans is they are going to get caught. Investors need to be extra careful when they are investing in this kind of company because they can lose all of their money and these stocks are particularly vulnerable to manipulation more than ever because of the internet,” said John Stark, head of internet enforcement at the SEC.

VeriSign has designed new software which can spot fraudulent trading and alert brokers to these types of scams. It works by monitoring real time trading. Brokers can add it to their systems and be alerted to any unusual trading activity their customers engage in-for example, if a customer who usually trades pharmaceutical stocks suddenly trades a penny stock having to do with technology and at a price much higher than normal for them.

The SEC had no comment on the software but VeriSign is confident it will stop penny stock scammers cold.