This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Beware 'Hot' Stock Tips on Your Cell

Editor's Note: The following is an investor alert from NASD originally posted on Dec. 13. It is being republished here with their permission as a service to's readers.

You get text messaged on your cell phone. You check it -- and it's not from anyone you know. Instead, it's an unsolicited promotion for a low-priced "hot stock." The short message includes a stock symbol and reads: HOT BUY. 200% Profit Mon. 100% IN 2WKS. You've been cell phone spammed!

NASD is issuing this alert because it is aware of numerous instances in which stocks are promoted through cell phone text messaging. With email filtering systems becoming more effective, spammers are now turning to mobile text messages to get their messages out, resulting in significant increases in spam text messaging. (Wireless Services Corporation, which runs the data networks transporting text messages for several wireless carriers in North America, reported that the number of spam text messages more than doubled in the past year, from 18% of traffic in 2003 to 43% of traffic in 2004.)

Unfortunately, spam blockers for text messaging software may not be as effective as email filters. Even worse, cell phone customers may have to pay for the spam text messages they receive.

Be advised that in many cases the people behind these messages are likely to be paid to promote the stock or own some of the stock themselves. They are hoping that you and other investors will buy the stock, creating demand and causing the share price to go up. While you're holding your stock, the fraudsters sell their shares when the price peaks. Before long the stock price falls, and you lose money.

New Tactic, Old Scam

Cell phone text messaging to hype a stock is a wireless-age version of the old "pump and dump" scheme. While the technology has changed, the scam has not. "Pump and dump" schemes involve somebody recommending a company's stock through false and misleading statements (the pump). Misled investors then buy the stock, creating demand for the stock and often causing its price to soar. Fraudsters then sell their shares off (the dump), usually leaving investors with worthless or near worthless stock.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.73 -0.01%
FB $118.68 0.93%
GOOG $698.57 0.80%
TSLA $241.97 0.50%
YHOO $36.54 -0.16%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,082.49 +17.19 0.83%
NASDAQ 4,819.3120 +43.9540 0.92%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs