Pump-and-dump schemes: Don’t believe the hype - Crawford Ellenbogen

Although “pump-and-dump” fraud perpetrators mostly target inexperienced investors, anyone can fall for this scheme. Typically, a scammer buys shares in a relatively illiquid stock, then hypes it with false or misleading claims to potential investors (usually via phone or email). This drives up the price. When the stock hits a certain level, the fraudster sells, locking in short-term gains. The stock then crashes, leaving everyone else holding an empty bag. You can help avoid this fate by ignoring unsolicited stock tips, researching any potential investments and working with a reputable financial advisor.