What Is Meant by the Term Pump and Dump?
Video Summary: Explaining the pump and dump scheme
Pump and dumpers and investments scheme whereby a broker or a brokerage firm buys a particular stock themselves, they then go out onto the market and pump up the stock. They get investors to buy it and just by the nature of supplying demand that increases the value of the stock, as the stock value increases, the broker or the brokerage firm then sells their position, which will decrease the value of the stock. Meaning, those who help pump up the value have it dumped on them, and the value decreases. It typically only happens with small companies and ones that are very thinly traded where they're not traded every second or half second like a Microsoft or a GE might be traded but it's sadly still a very common occurrence that you see in the brokerage industry if you think that you've been involved in a pump and dump scheme, you should call our office so that we can research the stock and research the broker and brokerage firm involved to see whether that's a real possibility.