Don't Be a Pump and Dump Chump

Nearly every day when I check out the junk folder in my email inbox, I find at least one unsolicited email trying to convince me that RIGHT NOW is the time buy some cheap penny stock. These kinds of solicitations, almost without exception, are connected to schemes known as pump and dump scams, where fraudsters will buy up a bunch of low priced microcap stock (the prices usually vary from a fraction of a penny to a few cents per share), blast out millions of spam emails touting it as a hot buy, and then dump their shares as soon as the share price ticks up from all the suckers buying into the scam.

The resulting flood of shares dumped back into the market causes the price of the pumped stock to plummet, and very quickly investors not in on the game lose everything they invested. Don't Be a Pump-and-Dump Chump - Security Fix

Linked by shanmuga Wednesday, 6th September 2006 10:20PM