Consumer Encyclopedia
Pump and dump scam
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Pump and dump scam
In this investment scam, owners of a particular stock try to artificially drive the price up by starting a rumor campaign about the bright future of the stock. Usually done through mass spam e-mail and phone calls, messages will tell consumers that the stock is about to take off. Consumers frantically buy shares, which indeed causes the stock price to skyrocket. The original stockholders then sell and cash in on their profits.
The remaining stockholders are left with worthless assets, since there has been a massive sell-off and the stock probably wasn't worth much to begin with.
Be suspicious of any unsolicited “hot stock tip,” whether it arrives by fax, e-mail or phone.
