Stocks & Shares

Online Trading – A Warning!

Avoiding the Pitfalls of Online Trading, a guide by US-CERT


Online trading can be an easy, cost-effective way to manage investments. However, online investors are often targets of scams, so take precautions to ensure that you do not become a victim.

What is online trading?

Online trading allows you to conduct investment transactions over the internet. The accessibility of the internet makes it possible for you to research and invest in opportunities from any location at any time. It also reduces the amount of resources (time, effort, and money) you have to devote to managing these accounts and transactions.

What are the risks?

Recognizing the importance of safeguarding your money, legitimate brokerages take steps to ensure that their transactions are secure. However, online brokerages and the investors who use them are appealing targets for attackers. The amount of financial information in a brokerage’s database makes it valuable; this information can be traded or sold for personal
profit. Also, because money is regularly transferred through these accounts, malicious activity may not be noticed immediately. To gain access to these databases, attackers may use Trojan horses or other types of malicious code.

Attackers may also attempt to collect financial information by targeting the current or potential investors directly. These attempts may take the form of social engineering or phishing attacks (see Avoiding Social Engineering and Phishing Attacks for more information). With methods that include setting up fraudulent investment opportunities or redirecting users to malicious sites that appear to be legitimate, attackers try to convince you to provide them with financial information that they can then use or sell. If you have been victimized, both your money and your identity may be at risk.

How can you protect yourself?

  • Research your investment opportunities – Take advantage of resources such as the U.S. Securities and Exchange Commission’s EDGAR database and your state’s securities commission (found through the North American Securities (more…)

e-Gold indicted on money-laundering charges

e-Gold, in Melbourne, Florida issued the following shock announcement on their website.

“On April 24, 2007, a Federal Grand Jury handed down an indictment charging e-gold Ltd., Gold & Silver Reserve, Inc., and the Directors of both companies with money laundering, operating an unlicensed money transmitter business, and conspiracies to commit both offenses.”

If half of what they claim is correct, they are being subjected to overreaching and unfair treatment by the US Justice Department. Obviously this is a legal area that challenges the most experienced legal & financial minds and breaks new ground on long-founded laws, designed to deal with bricks and mortar institutions (banks) and bricks of actual gold.

They go on to claim that their security measures are more stringent than those of banks, and that as they only ever accept bank-to-bank transfers (no cash or check operations), they cannot be accused of money laundering as no money is involved.

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Pump & Dump Spam Scam gets action

Pump and Dump ImageIn their biggest strike ever against online investment scams, US regulators on Thursday shut down trading in 35 over-the-counter stocks that have been the subject of spam e-mails touting their investment potential.

Christopher Cox, the Securities and Exchange Commission chairman, estimated that more than 100m stock-touting e-mails are sent each week.

The majority are pump-and-dump schemes in which stock promoters buy penny stocks and try to resell them to gullible investors at higher prices. The most successful campaigns can significantly move stock prices.

My honeypot email accounts attract way too many of these emails. The quality of the spam machinery for distributing and creating these emails is very high which shows that the scam is working and making someone a lot of money.

Pump and Dump ImageTo you and me, the ‘pump and dump’ spam emails just look like poor quality mages (See inset) in a misleading email message and subject but there’s a good reason the image is ‘grainy’. It’s to disguise the digital fingerprint of the image, making it all but impossible to identify them with anti-spam software.

According to the SEC website, you can forward any of these emails you get direct to them for investigation: