Pump And Dump
Definition of 'Pump And Dump'A scheme that attempts to boost the price of a stock through recommendations based on false, misleading or greatly exaggerated statements. The perpetrators of this scheme, who already have an established position in the company's stock, sell their positions after the hype has led to a higher share price. This practice is illegal based on securities law and can lead to heavy fines.The victims of this scheme will often lose a considerable amount of their investment as the stock often falls back down after the process is complete. |
|
Investopedia explains 'Pump And Dump'Traditionally, this type of scheme was done through cold calling, but with the advent of the internet this illegal practice has become even more prevalent. Pump and dump schemes usually target micro- and small-cap stocks, as they are the easiest to manipulate. Due to the small float of these types of stocks it does not take a lot of new buyers to push a stock higher.Claims about how a stock is set to break out should be met with a considerable amount of caution. It is important to always do your own research in a stock before making an investment. |
|
Related Definitions
Articles Of Interest
-
Pump And Dump
Learn more about this devious scheme that targets micro- and small-cap stocks. -
How To Safeguard Your Tax Returns From Identity Theft
Identity thieves love tax season. In 2012, there were 13 million victims of identity theft. As easy as it is for thieves to steal your information, there are also simple measures you can take ... -
How To Report A Tax Cheat
If you report a tax evader to the IRS, you could be eligible for a reward. -
How To Identify A Micro-Cap Scam
Discover how to distinguish a real investment opportunity from a fraudulent one. -
The Underground Internet Economy Of Cybercrime
Cybercrime represents an underground economy worth $114 billion. Let's take a look at how this economy operates. -
4 Crimes By Real-Life Grinches
These crimes happen all over the country during the holiday season. -
What is a stock ticker?
A stock ticker is a report of the price for certain securities, updated continuously throughout the trading session by the various stock exchanges. A "tick" is any change in price, whether that ... -
Beware These Disaster-Related Scams
Con artists prey on the weak. Those who just survived a natural disaster can be easy targets. -
Illegal Activities That Could Help The Economy
Legalizing prostitution and street drugs nationwide may actually benefit the economy. -
How To Protect Your Small Business From Fraud
Small business owners are at risk of being scammed. Here's what you need to know to avoid that.
Free Annual Reports