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This Is What a Penny Stock Spam Email Looks Like

Stocks rallied in the first quarter the most they had in 14 years: The Dow Jones Industrial Average was up 8%, and the S&P 500 was up 12%.

Yet the one market that appears to be even more frothy is in sending penny stock email spam. Midway through the first quarter, judging by our email inboxes, we knew stocks were going crazy:

Snapshot of Brian Richards' inbox, taken in early March 2012.

Around the time the market was bottoming out in early 2009, Canada's CBC reported:

There's another business hurting because of the global economic downturn ... stock spamming. ... Stock spam made up just 0.6% of all email spam caught by content filters in the second half of 2008, down from 9.6% in the first half of the year, according to a Microsoft security report . ... "Stock-related spam all but disappeared from the content filters," the report found.

Microsoft's most recent report covers the first half of 2011, and it shows that stock spam was still stuck in a bear market: As a percentage of email spam, penny stock teasers represented just 1.3%. Based on anecdotal experience, we expect that figure to be far higher when Microsoft's first-half 2012 report is released next year.

Legal-seeming spam
Much stock-spam email is illegal because it violates Section 17(b) of the Securities Act of 1933, which bars people from promoting stocks for pay without disclosing their compensation.

Yet much of the new penny stock spam goes to great lengths to comply with the law -- or at least to seem legal. One recent stock-touting email measured a robust 1,204 words, 700 of which were devoted to an ostensible legal disclaimer.

We decided to decode that 700-word disclaimer to help translate the legalese. Note: All offset text is from an actual penny stock email received in mid-February 2012. The "Translations" are our own.

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment advisor either with the U.S. Securities and Exchange Commission (the "SEC") or with any state securities regulatory authority.

Translation: We're either a couple of guys in a basement running a scam, or we're an upstart publishing company trying to help people make good decisions with their money.

We are neither licensed nor qualified to provide investment advice. The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.

Translation: OK, fine -- we're a couple of guys in a basement, and we're not interested in helping you make good decisions. You know how, on TV, you can tell the difference between an episode of The Simpsons and an ad for antiperspirant? You can't really do that here.

The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.

Translation: Just to be clear, we're not trying to sell you any securities. In fact, as you will see later, we may have sold ours already.

We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Translation: We use a loose definition for "individuals who wish to receive them," which includes individuals who do not wish to receive them but who check their spam folder.

Our newsletter have [sic] been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report. Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Translation: Perhaps we should have done a better job of proofreading here, but any money spent on editing is money that would otherwise go straight to our pockets, and besides, nobody is ever going to read this far. In any event, you'd be a dodo bird to rely on us. Thank goodness for us that kind of dodo is not extinct. [Note from Brian and Lawrence: If someone tells you that you should "assume that all information contained in the report" that they've sent you "is not trustworthy," then you should probably believe them.]

Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Translation: If you pay attention to us (which we've really told you not to do), you will probably lose all your money.

All direct and third party compensation received has been disclosed within each individual profile in accordance with section 17(b) of the Securities Act of 1933. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies.

Translation: People are paying us to publish this publication; they may hold large amounts of stock, or they may be the company itself. We don't mind telling you that, because the law tells us we have to, and we're pretty confident that most people won't read this far. Can you blame us for publishing optimistic things about the stocks that our clients are trying to sell? Wouldn't you?

We can hold, buy, and sell securities in the companies profiled. When compensated in shares, all readers should be aware that is our policy to liquidate all shares immediately. We reserve the right to buy or sell the shares of any the companies mentioned in any materials we produce at any time. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled companies.

Translation: We reserve the right to pump and then dump. At least we're candid about that, except for the fact that this is buried in the 700-word disclaimer at the bottom of this email.

Information contained in our report will contain "forward looking statement" as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.

Translation: We're now going to make this sound as official as possible by using as much lingo as we can think of. Also, please don't sue us.

Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.

Translation: As we've said before, don't rely upon us to be right. Heck, we could be wrong about the future, even if we did our own research and weren't paid to be optimistic.

Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company's most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

Translation: Again, we're not a reliable source of information about any company. If you want real facts, go to a company's filings (but we know that many of you won't). [Note: If you're getting spam about a company, you probably don't need to check out its filings -- just stay away.]

We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company's plans or ability to effect any planned or proposed actions.

Translation: We do our best to provide you with the best information that money can buy (or sell), so long as we don't have to do any actual research.

We have no first-hand knowledge of any profiled company's operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

Translation: It doesn't matter what the company is or does, and that's good, because we certainly don't know. All that matters is that you remember the ticker and place an order for it.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

Translation: Don't sue us. Please.

We encourage you to invest carefully and read investment information available at the websites of the SEC at and FINRA at

Translation: Look, we're good corporate citizens! Besides, we know that few, if any, of our target audience will follow those links -- or will have even read this far.

When you see a pump and dump
So what should you do when you receive email about a penny stock that includes a disclaimer like this (or, worse, one that doesn't include a disclaimer at all)? Hitting "delete" is a good idea. This study explains why, but look no further than the Fool's TMFStockSpam CAPS account, which tracks the performance of shorting stocks after they've been blasted out via pump-and-dump email campaigns. Out of 74,401 CAPS members, it's ranked 26th, with an accuracy of 90%.


Brian Richards, managing editor of, owns shares of Microsoft. Lawrence Greenberg, chief legal officer at The Motley Fool, also owns shares of Microsoft.

The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. We're telling you all of this because of The Motley Fool's disclosure policy.

Read/Post Comments (22) | Recommend This Article (86)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 17, 2012, at 2:20 PM, prginww wrote:

    That StockSpam Caps account performance really is impressive!

  • Report this Comment On April 17, 2012, at 2:25 PM, prginww wrote:

    Great stuff.

  • Report this Comment On April 17, 2012, at 3:10 PM, prginww wrote:

    Advertisements for SNPK has been blowing up my SPAM box for a couple weeks now. It's gone from probably .50 to about $2... some poor person is going to buy at $2 and lose all of their money.

  • Report this Comment On April 17, 2012, at 5:02 PM, prginww wrote:

    Great article.

  • Report this Comment On April 17, 2012, at 5:35 PM, prginww wrote:

    ^^^ or it goes up to $3 and they made a Foolish decision ;)

  • Report this Comment On April 17, 2012, at 5:50 PM, prginww wrote:

    Everyone should read this article. Great work!

  • Report this Comment On April 17, 2012, at 5:50 PM, prginww wrote:

    Do you really have to waste time and effort on this subject?. I cannot believe that any subscriber to TMF does not already know this.

  • Report this Comment On April 17, 2012, at 6:08 PM, prginww wrote:

    You missed one important translation: "Don't blame us alone if you invest and lose it all. Also blame the government and the lawyers who REQUIRE everyone in the investments business to bury you in thousands upon thousands of words of crap like this. In fact, these rules HELP us numb your mind and dazzle your senses with what SEEMS to be just the sort of compliance with all the rules that you expect of a good citizen."

  • Report this Comment On April 17, 2012, at 6:15 PM, prginww wrote:

    Disclaimer is owned and operated by Tribeca Investments Ltd. Tribeca Investments Ltd engaged in the business of advertising and promoting companies for monetary compensation. expects to receive $40,000 for marketing services for OREO by Winning Media. expects to receive $40,000 for marketing services for SEFE by a non-controlling third-party shareholder. Anyone viewing this newsletter should assume the hiring party or affiliates of the hiring party own shares of OREO & SEFE of which they plan to liquidate, further understanding that the liquidation of those shares may or may not negatively impact the share price. Any compensation received by Tribeca Investments Ltd constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. A third party of Tribeca Investments Ltd may have shares and may liquidate, which may negatively affect the stock price. Tribeca Investments Ltd affiliates may at any time have a position in the securities mentioned herein and may increase or decrease such positions without notice which will negatively affect the market. All content in our releases is for informational purposes only and should not be construed as an offer or solicitation of an offer to buy or sell securities. Neither the information presented nor any statement or expression of opinion, or any other matter herein, directly or indirectly constitutes a solicitation of the purchase or sale of any securities.’s sponsored advertisements do not purport to provide an analysis of any company’s financial position, operations or prospects and this is not to be construed as a recommendation by or an offer or solicitation to buy or sell any security. Neither the owner of nor any of its members, officers, directors, contractors or employees is licensed broker-dealers, account representatives, market makers, investment bankers, investment advisors, analyst or underwriters. Investing in securities, including the securities of those companies profiled or discussed on this website is for individuals tolerant of high risks. Viewers should always consult with a licensed securities professional before purchasing or selling any securities of companies profiled or discussed in our releases. It is possible that a viewer’s entire investment may be lost or impaired due to the speculative nature of the companies profiled. Remember, never invest in any security of a company profiled or discussed in a release or on our website unless you can afford to lose your entire investment. Also, investing in micro-cap securities is highly speculative and carries an extremely high degree of risk. To review our complete disclaimer and additional information, please visit makes no recommendation that the securities of the companies profiled or discussed in our releases or on our website should be purchased, sold or held by investors.

  • Report this Comment On April 17, 2012, at 6:32 PM, prginww wrote:

    I made 3k on SNPK when i should have made 6k...

    It was accidental of course from all the spam and about the onlt time I can remember that happening since TASR was in play.

  • Report this Comment On April 17, 2012, at 7:34 PM, prginww wrote:

    HaHaHa, personally I love reading pump N'dumps, vast source of amusement,also a great way to bank points on Caps by red-thumbing them.

  • Report this Comment On April 17, 2012, at 9:35 PM, prginww wrote:

    If only we could actually find shares to borrow or puts to buy...such an excellent strategy. Heh, maybe Barclays will create the "Ultra 3X Short Pump-N-Dump" ETF!

  • Report this Comment On April 17, 2012, at 10:34 PM, prginww wrote:

    OK, I stopped reading in the middle of the email and I know these guys get paid to promote/pump &dump the securities they promote but this hype works. Specially if it's a 0.10 or a little higher or lower. I personally in real life got into GMPM (worthless pharma company probably with false PR news) at 0.13 and got out at 0.21. The stock itself opened at 0.95 and peaked at 2.45. Tell me that's not a profit!! Damn risky but gives way better returns if ur ready to play and put smart limit orders. Sorry, I know I'm negating all what the Fool's about but just giving my real life 2 cents here.

    PS: SNPK which I refuse to get in has gone from 0.40 a few weeks ago to $2+ now. i'm sure the FALL will b very steep and painful for some.

  • Report this Comment On April 17, 2012, at 10:58 PM, prginww wrote:

    You need to mention that, as with mant alledgedly reputable companies (credit card issuers, insurance cos, etc,) these disclaimers are printed with faded grey ink on light grey paper and in very tiny print.If you don't need glasses now, you will after reading your first one along with a bottle of excedrin.

  • Report this Comment On April 17, 2012, at 11:50 PM, prginww wrote:

    Unfortunately, those spam emails were my introduction to stock advice. Thankfully I didn't buy very often back then and came by one of your broadcast emails with a year or so. Everyone starts out dumb or with just enough info to be dangerous to themselves.

  • Report this Comment On April 18, 2012, at 12:33 AM, prginww wrote:

    New to trading so I thank you for this. Took my tax return this year and opened an investment account.

    I've been buying SNPK since it was at .62. Made a few hasty decisions in March but finally settled with 3000 shares at a cost of .86 Sold today at 2.14.

    Up $3,400 and change.

  • Report this Comment On April 18, 2012, at 2:32 AM, prginww wrote:

    True known fact--

    I never started to really make money until I started to actually trust the ultimate FOOL!

    Love you guys!

    Yes it did take a long time, but am now a very loyal follower and big mouther whenever I talk about finance.

    Your Welcome!

    But yes

    Thank you!

    cnbc sucks

    penny stocks are horrible

    drgz can go to the crapper!

  • Report this Comment On April 18, 2012, at 3:41 AM, prginww wrote:

    As SNPK is mentioned here a few times there's a reporter in Vancouver who spends his time writing on these scams. He has three articles to date on SNPK. There is some interesting backstory on the setup of SNPK using third parties offshore to hide the beneficial owners.

  • Report this Comment On April 18, 2012, at 11:14 AM, prginww wrote:

    Great article!

  • Report this Comment On April 18, 2012, at 2:20 PM, prginww wrote:

    It looks like my link doesn't work properly. Here's the first article in the series for those that are curious.

  • Report this Comment On April 20, 2012, at 11:30 AM, prginww wrote:

    "Also blame the government and the lawyers who REQUIRE everyone in the investments business to bury you in thousands upon thousands of words of crap like this. In fact, these rules HELP us numb your mind and dazzle your senses with what SEEMS to be just the sort of compliance with all the rules that you expect of a good citizen."

    You'll note that most of the fine print is a way to avoid legal culpability in the event of various circumstances. That's the nature of contracts in a complex economy, and it is indeed a problem for the average consumer. Please bear in mind that in the absence of government regulations, the alternative is individual contracts, all of which require increasing specificity as the historical record builds up.

    That's why the Obama administration implemented a Consumer Financial Protection Bureau; one of the first actions of the new organization was to design and propose a two-page mortgage agreement to ensure that people had clarity in understanding just what they were signing up for.

    It is refreshing to see government stepping up and addressing the problems caused by lawyers and inefficiencies inherent to the capitalist system. I'm glad to see that you support improvements in the way in which these contracts are written. Please keep Obama's solution in mind next time you vote. :)

  • Report this Comment On August 15, 2012, at 1:30 AM, prginww wrote:

    How funny! I learned long ago to just avoid those pump and dump emails. I did used to get a kick out of counting the number of newsletters I received promoting exactly the same stock. The worst thing about these spam emails is they give the good penny stocks a bad name and there are some good ones!

    Joe Wolfe

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