Essay on Finance : Pump And Dump Scheme

1923 Words Jun 25th, 2016 null Page
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 pump-and-dump scams so that individuals don’t fall victim to them. This is just to say that the practice is becoming more common and that discussing the practice itself can be beneficial for investors, as it makes them knowledgeable of the schemes that are happening in the market.
An authentic norm associated with this practice could be that…

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