"Pump-and-Dumps" and Market Manipulations "Pump-a
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"Pump-and-Dumps" and Market Manipulations
"Pump-and-dump" schemes involve the touting of a company's stock (typically small, so-called "microcap" companies) through false and misleading statements to the marketplace. These false claims could be made on social media, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is "pumped" up by the buying frenzy they create. Once these fraudsters "dump" their shares and stop hyping the stock, the price typically falls, and investors lose their money.
If this sounds very similar to what the moderators and big supporters did on IFlub, you are absolutely correct. According to the official government website link below, what was done on IFlub was illegal, and can be prosecuted.
http://www.sec.gov/answers/pumpdump.htm
So what is the difference between honest posts supporting and researching a stock, and the kind of posts claiming people talked to the CEO or met with the CEO privately and were told what was going to happen shortly or in the very near future?
The difference is that one is basic research and opinion, while the other is pure market manipulation.