A Brief History of Malware and Cybercrime
12 notable developments in three decades of online threats, with notes on responses.
When it began: Pump and dump is as old as the financial markets themselves, but the Internet has given it new potency and made it a tool of organized crime. Late in 2006, hackers broke into accounts at two large U.S. brokerages to execute fraudulent trades. On Dec 15, shares of Apparel Manufacturing Associates were trading at 6 cents a share. A three-day spam campaign pumped the price up to 19 cents and trading volume on the 18th rose to 484,500 shares. The stock price peaked at 45 cents on Dec. 20. Two days later, the price had dropped to 30 cents and trading volume was down to 36,450 shares. In March this year, the SEC suspended trading on this stock and 34 others for ten business days, citing suspected manipulation.
What it is: Criminals buy stocks of companies whose shares sell for pennies—stocks usually sold over the counter rather than on exchanges—and then employ spammers to send e-mail inviting investors to reap the value of these undervalued companies. Because the prices and trading volumes of the penny stocks are so low to begin with, it doesn’t take much trading activity to pump up the stock price. Then the criminals cash in, causing the stock price to crash.
Response: Caveat emptor.
ADDITIONAL SOURCES:
Technicalinfo.net's paper on the history of phishing; Ronald B. Standler's essay about the Morris case; and Wikipedia.org articles on hacker history, Elk Cloner virus, rootkits, Morris worm, and the AIDS trojan horse.
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