10/21/2015 08:47 EDT | Updated 10/20/2016 05:12 EDT

Canadian Regulators Warn Of Stock 'Pump-And-Dump' Schemes On Smartphone Apps

VANCOUVER — Securities regulators in nine provinces are warning about fraudulent stock promotions that use popular smartphone applications such as WhatsApp to generate investor interest.

They say the so-called pump-and-dump scheme targets potential investors in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, and Saskatchewan.

The sham involves creating artificial interest in a particular stock by using spam to talk up the benefits of a company and convince people to invest.

But investors have no idea that the person or company touting the stock owns a large amount of it and as more investors buy shares, the value skyrockets.

Securities regulators say that once the price hits a peak, the scam artists sell their shares and the stock value plummets, with investors left holding worthless shares.

They say app users should ignore any promotional spam and report it to their provincial or territorial securities regulatory authority.