I've been reading a lot about how SEC has decided to halt trading of the company, if it is featured in those financial email spams floating around the internet, orchestrating those 'pump-and-dump' scheme/scam.
At first, I thought it was pretty smart of them to take this approach. That is until I read this article today from FT.com...
But aren't they going after the wrong guy(s)? I'm assuming that these email scammers are not hired by these companies to send out those spam emails. If this is correct, then shouldn't the SEC or the Law Enforcement Agencies be going after the spammers/scammers, instead of halting the trading of these companies? Besides, how difficult it is to reverse the trace to find out who has been profiting by these inflated prices, at the right time, at the right price, with increased volume?
With that thought in mind, I was thinking... if I pick up the content of these spam emails and change the Symbol to a company that is more renowned and send them out, is SEC going to halt trading on the 'big guys' too? (I know for a fact that there are valid email addresses for sale at bulk, somewhere out there on the internet.) I understand that with the 'big guys', it will take a lot to move the prices. But based on SEC's theory and approach, technically speaking, it could still happen! Besides, it's not like SEC is going to sit and wait for any 'unusual activity' to take place before taking actions. It seems to me that as soon as SEC come across those spam-emails, they are going to halt trading right away!
My point is... I don't think SEC should halt trading based of some spam-emails. I think they are just going after the wrong object... in this case, the publicly traded companies. Instead they should be going after the spammers. (Even if the spammers are, after all, hired by the said company) Although, I have to give the SEC the benefit of doubt that they do have some kind of rules and logic embedded into their decision making process. However, I just don't see how it can make sense, in terms of preventing what I mentioned from happening.
At first, I thought it was pretty smart of them to take this approach. That is until I read this article today from FT.com...
Over the past week the regulator has suspended trading in Alliance Transcription Services, Inc, Prime Petroleum Group, Inc, and T.W. Christian, Inc
But aren't they going after the wrong guy(s)? I'm assuming that these email scammers are not hired by these companies to send out those spam emails. If this is correct, then shouldn't the SEC or the Law Enforcement Agencies be going after the spammers/scammers, instead of halting the trading of these companies? Besides, how difficult it is to reverse the trace to find out who has been profiting by these inflated prices, at the right time, at the right price, with increased volume?
With that thought in mind, I was thinking... if I pick up the content of these spam emails and change the Symbol to a company that is more renowned and send them out, is SEC going to halt trading on the 'big guys' too? (I know for a fact that there are valid email addresses for sale at bulk, somewhere out there on the internet.) I understand that with the 'big guys', it will take a lot to move the prices. But based on SEC's theory and approach, technically speaking, it could still happen! Besides, it's not like SEC is going to sit and wait for any 'unusual activity' to take place before taking actions. It seems to me that as soon as SEC come across those spam-emails, they are going to halt trading right away!
My point is... I don't think SEC should halt trading based of some spam-emails. I think they are just going after the wrong object... in this case, the publicly traded companies. Instead they should be going after the spammers. (Even if the spammers are, after all, hired by the said company) Although, I have to give the SEC the benefit of doubt that they do have some kind of rules and logic embedded into their decision making process. However, I just don't see how it can make sense, in terms of preventing what I mentioned from happening.
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