What is a "Pump and Dump Scam?"
The "Pump and Dump" scam is a regular SPAM email received at SVPAL. The name comes from the fact that the originators of this SPAM attempts to artificially pump up the price of the stock in a small company to reap a profit. The scammer(s) selects a small company that has publicly traded stock. They buy up a large chunk of the company's stock. Then they send out large volumes of SPAM telling recipients that this stock is about to suddenly increase in price and that recipients should take advantage of this tip and buy the stock.
Sometimes enough people are duped by this SPAM into buying the stock that the price does actually increase, whereupon the scammer(s) sells the stock with a nice profit. Most of the people duped into buying the stock take a loss when the stock price subsequently drops.
Pump and Dump is defined as fraud and is a federal crime under US security laws. It's not a new scam but has recently seen significant increases as presumably more scammers are turning to this type of crime.
A number of Pump and Dump scam emails pass through SVPAL daily. For more information check out the following links:
Edited Example of an Actual "Pump and Dump" Scam Email
Date: 26 Sep 2005 Symbol: WWBP Price: $2.50 SHORT TERM 5 DAY PROJECTION: $5.50 - $6 Marks the Highest Award Over the Past 10 Years in the Biomedical Sciences Industry in China XI'AN, China, /Xinhua-PRNewswire/ - Worldwide Biotech & Pharmaceutical Company (OTC Bulletin Board: WWBP - News; "WWBP") has obtained the China Patent Golden Medal for "the Intact Hepatitis C Virus (HCV) and Method for Culturing HCV in Vitro by Cell Culture." The project "The Intact Hepatitis C Virus (HCV) and Method for Culturing HCV in vitro by Cell Culture" was awarded the Chinese Patent by China Patent Bureau on October 23rd, 2002. The patent was then awarded the prestigious China Patent Golden Medal (Chinese Patent No. 01124001.6) in the 8th China Patent Assessment organized by both General World Intellectual Property Organization (WIPO) and the China Patent Office. Importantly, this patent was recognized by the World Intellectual Property Organization (WIPO), issued as an outstanding Chinese Patented Invention, and was the highest award issued for achievements in the biomedical sciences industry over the past 10 years in China. "We are highly encouraged with our patent which is recognized by the WIPO and it is such a great achievement for the whole company. It's a great milestone," said WenXia Guo, CEO and President of WWBP, "the success of this patented invention leads our company to a worldwide market, we will continue our development and research of new inventions and bring health to every customer." When this Stock moves … WATCH OUT! … This is your chance to get in while it is still low. WWBP is a high growth issue and should be purchased by stock traders and those that can afford to make quick money on these fast moving issues. This is your chance to get your hands on one of these fast moving stocks and take short term prof1ts. This stock could reach record highs in the near future. We feel this is a "Stock Alert" and you should have this on your Radar for Monday September 26. GOOD LUCK AND TRADE AT THE TOP …
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