Last week Sophos experts were called in to provide protection against a widespread spam campaign that was being used to encourage users to buy stock in Southern Cosmetics.
According to Sophos, which is a global player in providing threat management solutions, the smear campaign consisted of emails with an embedded graphic that was used to avoid detection by anti-spam filters.
The infiltrated e-mail message told recipients that knowledgeable investors should buy stock in the company because of a business deal it was making with Naomi LLS, a cosmetics company endorsed by Naomi Judd.
In fact, the Naomi Judd cosmetics business was bought out by Southern Cosmetics in January of this year, following a successful collaboration towards the end of 2005.
Southern Cosmetics, which is based in Long Beach California and uses the internet to market and sell its beauty lines, has since taken it upon itself to promote and distribute the Naomi brands and to add to the company's own expanding product portfolio.
This has also led to the line being extended as well as the packaging being updated in an effort to help boost sales and strengthen the brand.
Meanwhile, all the hard work that Southern Cosmetics has put in in recent months to build up the Naomi Judd brand amd its other brands was being threatened by a potential spam attack.
Sophos experts were bought into identify the root cause of the spam campaign and implemented Genotype protection against future campaigns that might have similar characteristics.
Yhe initial spam campaign had an impact on the company's share price, which increased from less than 1 cent per share to reach over 6 cents during the time that the spam emails were in circulation.
"Spammers spread short term 'investment advice' in the hope of pumping a stock enough to offload their own shares at a profit. The increasing quantity and sophistication of pump-and-dump campaigns suggests that there is plenty of money to be made," said Graham Cluley, senior technology consultant for Sophos.
"Of course, legitimate investors are left to bear the after-effects of any eventual stock dump," Cluley added.
These so-called pump-and-dump campaigns work by purchasing share stock at low prices and then artificially inflating the stock price often by spreading rumors about potential investment potential.
When the stock price rises, often on the back of illegal spam campaigns similar to the one identified by Southern Cosmetics, the 'investors' then sell on their shares generating significant income for themselves in the process.