Wednesday, March 2, 2016
Pump and Dump Stock Schemes
Pump and dump stock schemes are a classic form of financial fraud with a long history that stretches back at least to the 1920s, which was an era of booming stock prices and rapidly increasing prevalence of telephones in the homes of ordinary Americans. As the scam was originally conceived and executed, people behind the scheme would place telephone calls touting worthless stocks to total strangers, just going down the list of names and numbers in printed telephone directories. This touting is the "pumping" part of the equation. The "dumping" part of the equation is making a successful sale, unloading the valueless securities on gullible investors.
