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Beware “Wrong Number” Answering Machine Stock Tips!

Phone TipsThe scenario is this. You come home from work and check your answer machine and there's a message waiting for you. It's from someone you don't know, obviously a wrong number, but in the message the caller tells her friend about a hot investment tip she's received.

Would you buy some stock in a company on the basis of a call like this, from someone you don't know?

Seems unlikely doesn't it, but that's exactly what's happening in the US right now, and if past experiences are repeated, it could happen here too.

What the US authorities are saying is that if you get a call like this, it's most likely not a 'wrong number' at all, but part of what's known as a 'pump and dump' scam. In the US, people are employed to leave messages like this on thousands of answer machines across the country. What the scammers behind this scam are trying to do is to influence people to buy stock in a company that they invest in, causing its share price to rise. The scammers then sell their shares at a profit and, once they stop promoting the stock, its price will fall and many investors will lose their money. Scammers choose stock that is only thinly traded and little is known about, so its share price is easily manipulated.

ASIC Advice
Relying only on tips about shares is like trying to learn a foreign language using a tourist phrase book. Never put your money into stocks on the basis of tips from people you don't know.

Read more about this scam on the US Securities and Exchange Commission's website.

© Copyright ASIC, 6 September 2004.

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