NASD today issued an Investor Alert, Beware of "Hot" Stock Tips on Your Cell Phone, warning investors of a new version of a "pump-and-dump" scheme that has made its way into investors' cell phones. NASD is issuing this Alert because it is aware of instances in which stocks are hyped through cell phone text messaging.

"The emergence of text messaging offers fraudsters another cheap and easy way to reach large numbers of potential investors," said NASD Vice President, Investor Education John Gannon. "Now, more than ever, investors need to be vigilant about doing their homework before investing and taking the necessary steps to reduce the likelihood of falling prey to these scams."

The Alert describes "pump and dump" schemes that involve an individual recommending a company's stock through false and misleading statements. Misled investors then buy the stock, often causing its price to soar. Fraudsters then sell their shares off, leaving investors with worthless stock. While the text messages are generally brief, they frequently include price targets or predictions of a tremendous run up in price, such as "200% Profit TODAY!" and pressure to invest immediately.

The best way to avoid being taken in by text message scammers is to ignore the message, the Alert explains. A cardinal rule of investing is to never rely solely on information received through an unsolicited source, be it a text message, e-mail, fax or phone call.