stock trading slang
stock trading slang
Pump and dump schemes have cost investors hundreds of millions of dollars in recent years. World English Dictionary defines as a "participation unscrupulous manipulation of the stock market: it describes a fraud scheme in which unscrupulous brokers, analysts, shareholders or recommend their own increase the stock price before selling a quick profit (slang). Â "Although the definition of a system of textbooks, is not described How this scam is operating in the investment market today.
An advanced communication system has made these systems easier to perpetrate. A fraudster may take a position on a stock promotion (drum) of the population and sell after prices rose, while sell short the shares down. Because you need to know the share price will be operated to be effective it needs to control for investors to buy and sell the stock.
The fraudster uses an action of micro-enterprises. Most of these stocks trade on the Over The Market -Counter Bulletin Board (OTC BB). These stocks are thinly traded help take an initial position at a lower price, control of information population and a strong increase in share price the demand for smaller ones. The textbook approach to the fraudster is often the agent to tell other investors about efforts to create demand and increase prices. The fraudster sell (dump) their shares at a profit.
The system developed using boiler room marketing, where technology telephony systems began to have systems autodial calls and economic costs. This situation continues to evolve to the fax machine, which is has become popular and least expensive boiler room workers. Once the Internet became popular, it has become the tool of choice for the fraudster. It is the most effective way to get information to investors and often reveals the true identity of Fraudster's.
A real case was as follows. Whoever is identified fraudsters a great little high-tech enterprise, which need capital to get their products on the market. Fraudster had two, an investment banker I knew in the center of the company that owns the concentration of capital. The owner agreed and suggested investment bank to take the company public by merging the company into a cleaning company under public law owned by Shell, which has been trading on the OTC-BB. Two held a fraudulent investment of $ 10 million to a third company public now. An initial deposit $ 800,000 has become the company with the balance due at closing. Fraudster one, two and several others who had knowledge of fraud, have taken positions in company stock at very low prices.
Then, exaggeration or pump began seriously. The owner began to submit news about new investment in the website of the company. The group of fraudsters, who had done this many times before, began to publish company information in chat rooms and websites. They have also bought shares at prices more encouraging in the preparation the price. The action began at $ 10, but rose to over $ 10 within weeks.
Now is the time of discharge or sale actions by criminals. Not only begun to sell off their positions, but also sold shares short, knowing that they will continue to decline. After they sold their positions at a good profit, two fraudster told the owner that the new investment has failed and the new hit companyA the site and cats. The stock was in freefall and substance below its original $ 10. Of course, the fraudsters to cover their short positions, causing another advantage ordered.
The owner about fraud? No, but encouraged to participate in the hype. He lost his investment and the company was in bankruptcy, have benefited from new investments. Of course, the new investment was 10 million fraud. How the group of scam artists in this scam? Nobody knows for certain, but based on the volume and price fluctuations, profits are calculated million.
The Securities and Exchange Commission has issued the following tips to avoid scams stocks on the internet: consider the source, determine if the securities transactions to verify the claims, research opportunity, monitors the output of high pressure, and always be skeptical.
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