Pump-And-Dump Stock Fraud Case Study

One of the schemes in finance is called “pump-and-dump” and refers to a stock fraud that involves inflating the price of an owned stock through misleading positive statements, in order to sell the inexpensively purchased stock at the raised price. The Securities and Exchange Commission’s goal is to protect investors and maintain fair, efficient markets. They have exposed multiple cases of pumping and dumping, which has become a fairly common practice in finance. In July 2015, the SEC released information about three men who pumped the price of penny stocks as high as 1800 percent before dumping the shares for almost three million dollars. In November 2015, the commission announced fraud charges against several alleged perpetrators behind a $78 million pump-and-dump scheme involving the stock of Jammin’ Java. Last December one man was charged for an elaborate pump-and-dump scheme that pocketed him over thirteen million dollars. All three of these examples occurred in 2015 and prove that the pump-and-dump scheme is becoming a frequent arrangement for people who hope to illegally make quick money. Forbes published an article on how to spot …show more content…
This is the purpose of the stock market for investors and is an appropriate game to play in business. An authentic norm for this practice would be to truthfully represent a stock and to purchase and sell shares. When comparing this authentic norm to the set of hypernorms, it is clear that this practice is legal, ethical, and legitimate. Investors would be being respectful to the other stock market participants. They would be playing the game as it was designed to be played, which is fairly and honestly, and they wouldn’t be inflicting intentional harm on anyone. Their gains would be justly earned by complying with state and federal