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Published on 14 Apr 2018
Many penny stocks are highly volatile, and there's often little
guarantee the company behind those stocks is legitimate. A little risk
is healthy for your portfolio, but with many penny stocks, it's just
plain dumb. Penny stocks have become a breeding ground for pump-and-dump schemes
that artificially inflate a holding's value before selling out.
The
fraudster turns a huge profit, but the investor is often left with
nothing.
And yet blissfully unaware investors flock to the space, hoping to make
millions out of a small initial investment.
The internet is rife with
entrepreneurs who promise to turn your $500 into $1 million trading
penny stocks alone.
But a simple Google search of "penny stock fraud" narrowed down to the
last year yields scores of reports of criminal activity, indictments,
lost fortunes and jail time related to super-small-cap stocks. If you're
still hoping to make your fortune in penny stocks, you're one of the
dumbest on Wall Street.
"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, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" sell their overvalued shares, the price falls and investors ...
Pump and dump - Wikipedia
https://en.wikipedia.org/wiki/Pump_and_dump
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