RE: RE: Pump and Dump( for your info)This illegal act consists of a group of investors who are publishing spectacular financial figures from a company or an announcement for a new product that will make stocks fly through the roof.
The stocks are promoted as inside information or hot tips through different channels: spam, message boards, chat rooms, newsletters… The pump and dump scams usually only work out for very small companies with penny stocks that are being traded over the counter. The promoters will always try to persuade you to buy stock very quickly, while it is still hot. They will tell you there are no risks involved and you can earn big bucks very easy.
Novice investors or day traders will purchase the stocks and by doing that the price will rise up high. This is called pumping the price. When the price peaks the promoters and the fraudsters will sell their shares and the price comes crashing down, leaving the unwitting investors with worthless stock. It will be too late when the innocent bystanders discover they are being fooled and they will sell their stock at any price to try to loose as less money as possible. When the scammers have sold their stock, the promo tour will end. You won’t hear about the company anymore, nor where they came from or what happened. It is insanely difficult to find out who was behind the scheme.
Pump and dump schemes have gained a lot of popularity in the organized crime scenes. The Mafia has been involved with a lot of stock schemes already. These scams are one of their greatest incomes.
To avoid a Pump and Dump you’d better do some research. Look at the company’s figures, although they are probably forged too. Don’t believe the stocks that are being heavily promoted can bring you an easy paradise. Guaranteed profits are not possible, and certainly not without a risk. Make sure you have a trustworthy stockbroker and call him to get info on the latest hot tip.
Inside information? You have to be kidding. Don’t trust someone who hands out all kinds of information about a certain stock. Don’t get involved with risky companies. Do not believe everything you read on message boards, chat rooms, newsletters. Be aware of stock spam in your inbox. Only deal with people you know and trust, because why would a stranger would want to give you the tip of a lifetime?
If penny stocks from one cent turn into 10 dollar stock in a minimum of time, have your doubts and beware. If you find out someone is hyping a new product or investment, you can almost rely on it you are being scammed. Just keep in mind: if something sounds too good to be true, it probably is too good to be true.