Pump and dump (P&D) is a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements (pump), in order to sell the cheaply purchased stock at a higher price (dump). Once the operators of the scheme "dump" (sell) their overvalued shares, the price falls and investors lose their money. This is most common with small-cap cryptocurrencies[1] and very small corporations/companies, i.e. "microcaps".[2]
Pump-and-dump schemes may take place on the Internet using an email spam campaign, through media channels via a fake press release, or through telemarketing from "boiler room" brokerage houses (such as that dramatized in the 2000 film Boiler Room).[4] Often the stock promoter will claim to have "inside" information about impending news. Newsletters may purport to offer unbiased recommendations, then tout a company as a "hot" stock, for their own benefit. Promoters may also post messages in online chat groups or internet forums, urging readers to buy the stock quickly.[2]
If a promoter's campaign to "pump" a stock is successful, it will entice unwitting investors to purchase shares of the target company. The increased demand, price, and trading volume of the stock may convince more people to believe the hype, and to buy shares as well. When the promoters behind the scheme sell (dump) their shares and stop promoting the stock, the price plummets, and other investors are left holding a stock that is worth significantly less than what they paid for it.
Fraudsters frequently use this ploy with small, thinly traded companies—known as "penny stocks", generally traded over-the-counter (in the United States, this would mean markets such as the OTC Bulletin Board or the Pink Sheets), rather than markets such as the New York Stock Exchange (NYSE) or NASDAQ—because it is easier to manipulate a stock when there is little or no independent information available about the company.[5] The same principle applies in the United Kingdom, where target companies are typically small companies on the AIM or OFEX.
A more modern spin on this attack is known as hack, pump and dump.[6] In this form, a person purchases penny stocks and then uses compromised brokerage accounts to purchase large quantities of that stock. The net result is a price increase, which is often pushed further by day traders seeing a quick advance in a stock. The original stockholder then cashes out at a premium.[7] Pump-and-dump schemes also permeate the crypto-market, targeting especially low-market-cap, illiquid coins on cryptocurrency exchanges.[8][1]
Examples
Stratton Oakmont
In the early 1990s the penny-stock brokerage Stratton Oakmont artificially inflated the price of owned stock through false and misleading positive statements in order to sell the cheaply purchased stock at a higher price.[9] Firm co-founder Jordan Belfort was criminally convicted for his role in the scheme. He later turned his story into a memoir, The Wolf of Wall Street, which was later adapted into an Academy Award–nominated film of the same name.
Jonathan Lebed
During the dot-com bubble, when stock-market fever was at its height and many people spent significant amounts of time on stock Internet message boards, a 15-year-old named Jonathan Lebed allegedly used the Internet to run a successful pump and dump. Lebed bought penny stocks and then promoted them on message boards, pointing at the price increase. Allegedly, when other investors bought the stock, Lebed sold his for a profit, leaving the other investors holding the bag. He came to the attention of the U.S. Securities and Exchange Commission (SEC), which filed a civil suit against him alleging security manipulation. Lebed settled the charges by paying a fraction of his total gains. He neither admitted nor denied wrongdoing, but promised not to manipulate securities in the future.[10]
Enron
As late as April 2001, before the Enron collapse, executives at the large energy company Enron participated in an elaborate scheme of pump and dump,[11] in addition to other illegal practices that fooled even the most experienced analysts on Wall Street. Studies of the anonymous messages posted on the Yahoo board dedicated to Enron revealed predictive messages that the company was akin to a house of cards, and that investors should bail out while the stock was good.[12] After Enron falsely reported profits which inflated the stock price, they covered the real numbers by using questionable accounting practices. Twenty-nine Enron executives sold overvalued stock for more than a billion dollars before the company went bankrupt.[13]
Park Financial Group and International Media Solutions, LLC
Park Financial Group, Spear & Jackson, and International Media Solutions, LLC were involved in a pump-and-dump scheme where the price per share increased by $14.00 and over 100,000 shares were traded each day, netting Spear & Jackson around $3 million in profits. In 2005, Spear & Jackson and International Media Solutions were fined over $8 million, including its two executive officers, Kermit J. Silva and Yolanda Velazquez, each paying an additional $420,000 out of their personal accounts. On December 5, 2007, Park and the company's president were ordered to pay over $113,000 in fines and penalties.[14][15]
Langbar International
Started as Crown Corporation, Langbar International was the biggest pump-and-dump fraud on the Alternative Investment Market, part of the London Stock Exchange. The company was at one point valued greater than $1 billion, based on supposed bank deposits in Brazil which did not exist. None of the chief conspirators were convicted, although their whereabouts are known. A patsy who made a negligent false statement about the assets was convicted and banned from being a director.[16] The investors who lost as much as £100 million sued one of the fraudsters and recovered £30 million.[17]
Being an unregulated market, and due to the concentration of a large amount of cryptocurrency in a small number of hands, the price of many cryptocurrencies like Bitcoin[22] is very sensitive to pump-and-dump schemes.[23][24] There are organised pump-and-dump schemes run through social media platforms including Telegram and Discord.[25]
Scam
Pump-and-dump stock scams are prevalent in spam, accounting for about 15% of spam e-mail messages. A survey of 75,000 unsolicited emails sent between January 2004 and July 2005 concluded that spammers could make an average return of 4.29% by using this method, while recipients who act on the spam message typically lose close to 5.5% of their investment within two days.[26][27] A study by Böhme and Holz[28] shows a similar effect. Stocks targeted by spam are almost always penny stocks, selling for less than $5 per share, not traded on major exchanges, thinly traded, and difficult or impossible to sell short. Spammers acquire stock before sending the messages and sell the day the message is sent.[29]
Comparison with other types of schemes
A pump-and-dump scam is a type of economic bubble, with the main difference between this scheme and most other types of bubbles being that the pump-and-dump bubble is deliberately perpetrated by unlawful activity. A pump-and-dump scheme is similar in many ways to a Ponzi scheme (in that both types of scam use misrepresentations in an effort to enrich the promoters and/or initial investors with money from later investors), however, there are a number of differences between the schemes:
Ponzi-type investments are privately traded, often between individuals that are known to one another, whereas pump-and-dump schemes are typically marketed to the general public and traded on public stock exchanges and the victims and perpetrators are not acquainted with each other.
Ponzi schemes typically promise very specific returns on investments and/or include falsified records implying consistent and steady returns, whereas pump-and-dump schemes only come with general and/or implied promises of substantial profits.
Ponzi schemes typically come with the expectation of profit over a relatively-extended period of time and typically last for months, years or even decades before their inevitable collapse. By comparison, pump-and-dump scams are designed to make profits extremely quickly and are executed over a period of weeks, days or even hours.
Ponzi schemes are occasionally the result of investment vehicles that are originally intended to be legitimate but ultimately fail to perform as expected. By comparison, pump-and-dump schemes are invariably intended to be scams from their conception, although a fairly common tactic employed by pump-and-dump schemers is to take over a once-legitimate business (one that is either failing or defunct), or even just its name, in order to pump and dump its stock.
For all of the above reasons, Ponzi schemes tend to leave a far more extensive trail of evidence. They are typically much easier to prosecute after they are discovered, and often result in much stiffer criminal penalties.
Pump-and-dump scams differs from many other forms of spam (such as advance fee fraud emails and lottery scam messages) in that it does not require the recipient to contact the spammer to collect supposed "winnings", or to transfer money from supposed bank accounts. This makes tracking the source of pump-and-dump spam difficult, and has also given rise to "minimalist" spam consisting of a small untraceable image file containing a picture of a stock symbol.[citation needed]
Scalping and social media
One variation of the pump-and-dump scam is known as "scalping." In a scalping scheme, a stock promoter takes a position in a stock and then touts the stock without disclosing his or her intent to sell the stock.[30][31] By recommending the stock (often, but not always, by providing inflated price targets or more generic promises of substantial returns), the promoter convinces others to purchase the stock, providing a temporary rise in share price and volume which allows the "scalper" to then sell his shares on unsuspecting investors and obtain a profit. Scalping scams are frequently effectuated through social media (e.g., Twitter), and may lead to both criminal and civil liability in the United States.[32][33] Like other pump-and-dump schemes, scalping scams frequently target microcap stocks because their low volume allows relatively small purchase volumes to cause significant spikes in the share price.[34] Given the rise of social media, scalping scams have become a significant focus of regulators in the United States in recent years.[30][35]
Another variant of the pump-and-dump scam, the "short and distort" works in the opposite manner. Instead of first buying the stock, and then artificially raising its price before selling, in a "short and distort" the scammer first short-sells the stock, and then artificially lowers the price, using the same techniques as the pump and dump but using criticism or negative predictions regarding the stock. The scammer then covers their short position when they buy back the stock at a lower price.[36]
Regulation
One method of regulating and restricting pump-and-dump manipulators is to target the category of stocks most often associated with this scheme. To that end, penny stocks have been the target of heightened enforcement efforts.
In the United States, regulators have defined a penny stock as a security that must meet a number of specific standards. The criteria include price, market capitalization, and minimum shareholder equity. Securities traded on a national stock exchange, regardless of price, are exempt from regulatory designation as a penny stock,[37] since it is thought that exchange traded securities are less vulnerable to manipulation.[38] Therefore, Citigroup (NYSE:C) and other NYSE listed securities which traded below $1.00 during the market downturn of 2008–2009, while properly regarded as "low priced" securities, were not technically "penny stocks". Although penny stock trading in the United States is now primarily controlled through rules and regulations enforced by the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA), the genesis of this control is found in state securities law.
The State of Georgia was the first state to codify a comprehensive penny stock securities law.[39] Secretary of State Max Cleland, whose office enforced state securities laws,[40] was a principal proponent of the legislation. Representative Chesley V. Morton, the only stockbroker in the Georgia General Assembly at the time, was a principal sponsor of the bill in the Georgia House of Representatives. Georgia's penny stock law was subsequently challenged in court. However, the law was eventually upheld in U.S. District Court,[41] and the statute became the template for laws enacted in other states. Shortly thereafter, both FINRA and the SEC enacted comprehensive revisions of their penny stock regulations. These regulations proved effective in either shuttering or greatly restricting broker/dealers, such as Blinder, Robinson & Company, which specialized in the penny stocks sector. Meyer Blinder was jailed for securities fraud in 1992, after the collapse of his firm.[42] However, sanctions under these specific regulations lack an effective means to address pump-and-dump schemes perpetrated by unregistered groups and individuals.
In popular culture
The 2000 film Boiler Room stars Giovanni Ribisi as Seth Green, a young man who gets a job as a trainee at a small brokerage firm called J.T. Marlin. He finds out that the firm engages in pump and dump schemes, selling stocks for fake or defunct companies.
^Frieder, Laura and Zittrain, Jonathan (March 14, 2007). "Spam Works: Evidence from Stock Touts and Corresponding Market Activity". Berkman Center Research Publication No. 2006-11. SSRN920553. {{cite journal}}: Cite journal requires |journal= (help)CS1 maint: multiple names: authors list (link)
Pour les articles homonymes, voir Pentecôte (flore) et Île de Pentecôte. Pentecôte La Pentecôte, Heures d'Étienne Chevalier, enluminées par Jean Fouquet, musée Condé, Chantilly. Observé par les Chrétiens Type Célébration religieuse Signification Commémore la descente de l'Esprit saint sur les Apôtresle 50e jour à partir de Pâques. Date 7 semaines après le dimanche de Pâques (50 jours en comptant celui-ci) Date précédente 28 mai 2023 Date courante 19 mai 2024 D…
Untuk miniseri, lihat Kulepas Dengan Ikhlas. Kulepas dengan IkhlasSingel oleh Lesti KejoraDirilis5 Agustus 2020 (2020-08-05)FormatUnduhan digitalDirekam2020GenreDangdutDurasi6:13Label3D EntertainmentPenciptaAdibal SahrulProduserAdibal Music ProductionKronologi singel Lesti Kejora Ramadan Berkah (2020) Kulepas dengan Ikhlas (2020) Saat Terakhir (2020) Video musikKulepas dengan Ikhlas di YouTube Kulepas dengan Ikhlas adalah lagu oleh Lesti Kejora yang dirilis pada tahun 2020.[1] Latar…
Artikel ini tidak memiliki referensi atau sumber tepercaya sehingga isinya tidak bisa dipastikan. Tolong bantu perbaiki artikel ini dengan menambahkan referensi yang layak. Tulisan tanpa sumber dapat dipertanyakan dan dihapus sewaktu-waktu.Cari sumber: Daftar nama-nama Ketua Umum Persekutuan Gereja-Gereja di Indonesia – berita · surat kabar · buku · cendekiawan · JSTOR Berikut adalah daftar nama-nama tokoh yang pernah menjabat sebagai Ketua Umum Persekutu…
ثيرمون خريطة الموقع تقسيم إداري البلد اليونان [1] التقسيم الأعلى إيتوليا-أكارنانيا إحداثيات 38°34′26″N 21°40′03″E / 38.5739°N 21.6674°E / 38.5739; 21.6674 [2] السكان التعداد السكاني 8242 (إحصاء السكان) (2011)8659 (legal population of Greece) (2021)[3]10521 (legal population of Greece) (2011)[4]…
Italian footballer and manager (1921–1995) Edmondo Fabbri Fabbri in 1962Personal informationDate of birth (1921-11-16)16 November 1921Place of birth Castel Bolognese, ItalyDate of death 8 July 1995(1995-07-08) (aged 73)Place of death Castel San Pietro Terme, ItalyPosition(s) WingerSenior career*Years Team Apps (Gls)1938–1939 Imola 1939–1940 Forlì 1940–1942 Atalanta 1942–1943 Ambrosiana 1944 Faenza 1945–1946 Inter 1946–1947 Sampdoria 1947–1950 Atalanta 1950–1951 Brescia 19…
1985 1992 Élections cantonales françaises de 1988 25 septembre 1988(1er tour)2 octobre 1988(2d tour) Type d’élection Cantonales Corps électoral et résultats Inscrits au 1er tour 18 962 152 Votants au 1er tour 9 315 213 49,13 % 17,6 Votes exprimés au 1er tour 9 087 397 Blancs et nuls au 1er tour 227 816 Inscrits au 2d tour 13 343 590 Votants au 2d tour 6 275 415 47,03 % 19,2 Votes exprimés…
العلاقات الصومالية الدومينيكية الصومال دومينيكا الصومال دومينيكا تعديل مصدري - تعديل العلاقات الصومالية الدومينيكية هي العلاقات الثنائية التي تجمع بين الصومال ودومينيكا.[1][2][3][4][5] مقارنة بين البلدين هذه مقارنة عامة ومرجعية للدولتين: …
ألفية: ألفية 3 قرون: القرن 20 – القرن 21 – القرن 22 عقود: عقد 1970 عقد 1980 عقد 1990 – عقد 2000 – عقد 2010 عقد 2020 عقد 2030 سنين: 2004 2005 2006 – 2007 – 2008 2009 2010 2007 في التقاويم الأخرىتقويم ميلادي2007MMVIIتقويم هجري1427–1428تقويم هجري شمسي1385–1386تقويم أمازيغي2957من بداية روما2760تقو…
Bagian dari seri artikel mengenaiSejarah Jepang PeriodePaleolitiksebelum 14.000 SMJōmon14.000–300 SMYayoi300 SM – 250 MKofun250–538Asuka538–710Nara710–794Heian794–1185Kamakura1185–1333Restorasi Kemmu1333–1336Muromachi (Ashikaga) Nanboku-chōSengoku 1336–1573Azuchi–Momoyama Perdagangan dengan Nanban 1568–1603Edo (Tokugawa) SakokuPersetujuan KanagawaBakumatsu 1603–1868Meiji Perang BoshinRestorasiPerang Sino-Jepang PertamaPemberontakan BoxerPerang Rusia-Jepang 1868–1912Ta…
School district in Texas, United States This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed.Find sources: Mabank Independent School District – news · newspapers · books · scholar · JSTOR (July 2022) (Learn how and when to remove this template message) Introduction to Mabank ISD Mabank Independent School DistrictAddress310 E Mark…
2000 fighting video game 2000 video gameRockman Battle & FightersDeveloper(s)CapcomPublisher(s)CapcomDesigner(s)Keiji InafuneSeriesMega ManPlatform(s)Neo Geo Pocket Color, Nintendo SwitchReleaseNeo Geo Pocket ColorJP: July 26, 2000[1]SwitchWW: August 3, 2022[2]Genre(s)FightingMode(s)Single-player, multiplayer Rockman: Battle & Fighters (ロックマン バトル&ファイターズ, Rokkuman Batoru Ando Faitāzu) is a Mega Man fighting game developed and published by C…
أبو الفضل إلجي بيك (بالأذرية: Əbülfəz Elçibəy) معلومات شخصية اسم الولادة (بالأذرية: Əbülfəz Qədirqulu oğlu Əliyev) الميلاد 24 يونيو 1938 الوفاة 22 أغسطس 2000 (62 سنة) [1] أنقرة سبب الوفاة سرطان مكان الدفن رواق الشرف [لغات أخرى] مواطنة الاتحاد السوفيتي أذربيجان…
21st Mechanized CorpsA T-34 burns in Russia in 1941ActiveMarch–August 1941CountrySoviet UnionBranchArmoured ForcesTypeMechanized CorpsEngagementsBaltic Operation (1941)CommandersNotablecommandersMajor General LelyushenkoMilitary unit The 21st Mechanized Corps was a formation in the Soviet Red Army during the Second World War. Initially formed in March 1941, in response to the German victories in the West it was attached to the newly forming 27th Army, and held in reserve near Opochka in Soviet…
Choosing a candidate other than preferred to undercut a less desired one Part of the Politics seriesVoting Balloting Ballots Absentee ballot Provisional ballot Sample ballot Candidates and Ballot measures Write-in candidate Electorate Slate Ticket Collection Ballot box Compulsory voting Early voting Electronic voting Open ballot Polling place Postal voting Precinct Vote center Voting booth Counting Popular vote Tally Voting machine Electoral systems Plurality and majoritarian systems First-past-…
Austrian actress (born 1980) This biography of a living person relies on a single source. You can help by adding reliable sources to this article. Contentious material about living people that is unsourced or poorly sourced must be removed immediately. (September 2015) (Learn how and when to remove this template message) Franziska WeiszFranziska Weisz, Berlinale 2020Born (1980-05-04) 4 May 1980 (age 43)Vienna, AustriaNationalityAustrianOccupationActressYears active2001–presentSpouse …
Daily log of ongoing military conflict This is a dynamic list and may never be able to satisfy particular standards for completeness. You can help by adding missing items with reliable sources. Timeline of the Russian invasion of UkrainePrelude (up to 23 February 2022)Initial invasion (24 February – 7 April 2022)Southeastern front (8 April – 28 August 2022)2022 Ukrainian counteroffensives (29 August – 11 November 2…
Heart Lake at the Heart Lake Conservation ParkLocationBramptonCoordinates43°44′31″N 79°47′42″W / 43.742°N 79.795°W / 43.742; -79.795Websitetrca.ca/parks/heart-lake-conservation-area/ Heart Lake Conservation Park (HLCA) occupies 169 hectares (418 acres) in the Etobicoke Creek watershed, within the City of Brampton, Ontario. It is owned and managed by the Toronto and Region Conservation Authority (TRCA). HLCA’s diverse ecosystem includes Heart Lake, the headwa…
Red anthocyanidin pigment found in certain flowers and fruits Pelargonidin Names IUPAC name 3,4′,5,7-Tetrahydroxyflavylium Systematic IUPAC name 3,5,7-Trihydroxy-2-(4-hydroxyphenyl)-1λ4-benzopyran-4-ylium Identifiers CAS Number 134-04-3 Y 3D model (JSmol) Interactive image ChEBI CHEBI:25863 N ChEMBL ChEMBL1197905 N ChemSpider 389676 N KEGG C05904 N PubChem CID 440832 UNII DFL6200791 Y InChI InChI=1S/C15H10O5/c16-9-3-1-8(2-4-9)15-13(19)7-11-12(18)5-10(17)6-14(11)2…
Pour les articles homonymes, voir Quevedo et Villegas. Francisco de Quevedo Données clés Nom de naissance Francisco Gómez de Quevedo Villegas y Santibáñez Cevallos Naissance 14 septembre 1580 Madrid, Monarchie espagnole Décès 8 septembre 1645 (à 64 ans) Villanueva de los Infantes, Manche, Monarchie espagnole Activité principale écrivain Auteur Langue d’écriture espagnol Œuvres principales La Vie de l'aventurier Don Pablos de Ségovie modifier Francisco Gómez de Qu…
Questa voce sull'argomento Nautica è solo un abbozzo. Contribuisci a migliorarla secondo le convenzioni di Wikipedia. Segui i suggerimenti del progetto di riferimento. Questa voce o sezione sull'argomento nautica non cita le fonti necessarie o quelle presenti sono insufficienti. Puoi migliorare questa voce aggiungendo citazioni da fonti attendibili secondo le linee guida sull'uso delle fonti. Segui i suggerimenti del progetto di riferimento. Descrizione delle parti di un rimorchiatore…