WASHINGTON-Securities industry regulator NASD is warning investors to be cautious about text messages they receive on their mobile phones that claim to provide hot stock tips.
A new version of a “pump-and-dump” scheme has emerged in the mobile environment, the agency said. Such schemes target large numbers of people and encourage them to invest in certain stocks, causing the stock price to rise while the fraudsters sell their shares.
“The emergence of text messaging offers fraudsters another cheap and easy way to reach large numbers of potential investors,” said John Gannon, NASD’s vice president of investor education. “Now, more than ever, investors need to be vigilant about doing their homework before investing and taking the necessary steps to reduce the likelihood of falling prey to these scams.”
The fraudulent text messages are typically brief but urge immediate action, said NASD.
