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Sri Lanka Equity Forum » Expert Chamber » Pump And Dump – Stock Fraud

Pump And Dump – Stock Fraud

Go down  Message [Page 1 of 1]

1 Pump And Dump – Stock Fraud on Thu Dec 22, 2011 3:04 am

sriranga

sriranga
Co-Admin
Pump and dump is a term referred to an investment scheme which attempts to boost the price of a company’s stock through false and misleading promotions or highly exaggerated statements. As long as there have been stocks, there have been stock fraudsters who seek to inflate the price of stocks. Usually the con artist is a third party person who is not in any relation to the company about to be scammed. The only In most cases the company itself is clueless that it is part of a scam. It’s chosen because its stock is selling for pennies a share, making it easy for the scammer to acquire a huge number of shares with a minimal investment. Due to the small float of these types of stocks it does not take a lot of new buyers to push a stock higher. Often the promoters will claim to have inside information about an impending development or to use a great combination of economic and stock market indicators to pick stocks. In reality, they are only thieves who will earn a quick profit by gaining lots of investors. Once the price is high enough they sell their shares and stop inflating and promoting the stock which ultimately ends with a sharp fall in prices and thus investors lose their money. Similar but inverse scam is Short and Distort.

HOW PUMP AND DUMP SCAM WORKS

a) You need a worthless stock, with a tight float and which is thinly traded. Small companies are needed as a precondition. Tight float means that most of the stocks are held by insiders and promoters and not by the general public. The reason for this is that it is much easier to manipulate the price of the stock when there are fewer stocks held by the general public since fewer buying of stock is needed to increase the price. You now buy an otherwise worthless stock at low prices. This sets the stage for to make money when the stock price elevates.

b) You start a promotional campaign to create interest in the stock. You use advertising campaigns, cold calls, newsletters, newsgroups, message boards, chat rooms, emails, seminars and any other media to promote the stock. Information used to promote the stock is said to be a rumor, inside information or your unbeatable technical and economical analysis. Investors are being enticed with visions of making the big score, quickly and without much risk. Your promotions will make investors swim in the water of excitement. Essentially, you are playing on the investors strings of greed to try to make the investors feel that he can’t miss the next great investment play.

c) You now attempt to increase the price of a stock. The stock chosen is thinly traded, so you and insiders can quietly raise the price by buying up the stock. Instead of putting bid offers at lower prices, they take the ask bids out and go up the price ladder. Since there is little public float, it doesn’t take a lot of buying to get the price up.

d) You have increased the price of a stock and now dump it at a higher level. You leave with a high profit, while other investors face a sharp ride to the south.

Source: http://www.bustathief.com
Please read the following ling
http://forum.srilankaequity.com/t14251-short-and-distort-naked-short#92022

http://sharemarket-srilanka.blogspot.co.uk/

2 Re: Pump And Dump – Stock Fraud on Thu Dec 22, 2011 6:42 am

Trillionaire

Trillionaire
Manager - Equity Analytics
Manager - Equity Analytics
Thank you! Clearly explained! Very Happy

3 Re: Pump And Dump – Stock Fraud on Mon Dec 26, 2011 3:04 pm

Quibit

Quibit
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
good contribution. thank you

4 Re: Pump And Dump – Stock Fraud on Mon Dec 26, 2011 3:38 pm

sriranga

sriranga
Co-Admin
@Quibit wrote:good contribution. thank you

Thanks for your valuable comment. Which I really appreciate.
What I read in the other websites, always I wish to share with everyone.
Again thanks for your valuable time to originate this forum which enable us to share our experience,thought etc etc...
Happy season greetings.

http://sharemarket-srilanka.blogspot.co.uk/

5 Re: Pump And Dump – Stock Fraud on Mon Dec 26, 2011 5:43 pm

HotBargain


Equity Analytic
Equity Analytic
this what happen now no? sellers on holiday make easier, we sell before they sell and we can dump on them! Very Happy

6 Re: Pump And Dump – Stock Fraud on Mon Dec 26, 2011 7:02 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@HotBargain wrote:this what happen now no? sellers on holiday make easier, we sell before they sell and we can dump on them! Very Happy

I think the best way to beat the game on their own game is avoid playing.. Or we have to calculate their next move and buy before them..

i.e. a person who buys a million of shares in one penny stock can up the share 1 rupee and dump.. still nealy 1 milion profit in few hours.. Wink

7 Re: Pump And Dump – Stock Fraud on Sat Mar 03, 2012 9:04 pm

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@smallville wrote:
@HotBargain wrote:this what happen now no? sellers on holiday make easier, we sell before they sell and we can dump on them! Very Happy

I think the best way to beat the game on their own game is avoid playing.. Or we have to calculate their next move and buy before them..

i.e. a person who buys a million of shares in one penny stock can up the share 1 rupee and dump.. still nealy 1 milion profit in few hours.. Wink

Well if you want to play with those I THINK YOU NEED TO HAVE SOME SUPPORT FROM THE BROKERS AS WELL

8 Re: Pump And Dump – Stock Fraud on Sat Mar 03, 2012 10:03 pm

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@Gaja wrote:

Well if you want to play with those I THINK YOU NEED TO HAVE SOME SUPPORT FROM THE BROKERS AS WELL

Yeeeee.. without the broker's support u cant succeed much.. U need to bribe ur broker to get some money wasters to attract ur shares.. so u can easily dump on them even Wink

9 Re: Pump And Dump – Stock Fraud on Wed Sep 25, 2013 10:57 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Time to read again.

10 Re: Pump And Dump – Stock Fraud on Wed Sep 25, 2013 1:30 pm

Sidath

Sidath
Manager - Equity Analytics
Manager - Equity Analytics
if the CSE and the SEC finally introduce short selling, you can always short the shares that they are trying to manipulate when they drive up the price. By shorting you prevent the share reaching an higher price from which they will dump

11 Re: Pump And Dump – Stock Fraud on Wed Sep 25, 2013 2:19 pm

Kithsiri

Kithsiri
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
You have to be smarter than a FOX when dealing such issues.Very Happy 

12 Re: Pump And Dump – Stock Fraud on Thu Oct 03, 2013 2:38 pm

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
CSE is not alone when it comes to pump and dump..
It's everywhere...!
If you are at the right place at the right time, you would not complain about it at all..!!
You don’t need to be a manipulator to get something out of such spike. All you need to have is good sense.

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