We’re making learning more fun for Investor Education Month. Every Friday, we at the ASC are showcasing one of our financial fraud explainer videos here on our blog– they’re a great way to learn about various types of fraud, and rewarding in more ways than one. Not only will you be gaining information to protect yourself and your finances, the quiz at the end is a contest for prizes!
This week, we’re talking about pump and dump schemes.
The term pump and dump is fairly descriptive of the scam itself. Individuals who own stock in a company “pump” it up by promoting it vigorously via online chat rooms, fake news releases and advertisements. When their promotions succeed, the stock price goes up, and the stock promoters will then “dump” it. They sell their shares at the “pumped” up high price, which then plummets after they sell, leaving the rest of the investors with shares that are virtually worthless.
So how can you tell it’s a pump and dump before getting involved? The typical red flags of investing apply - including promises of high rewards and low risks, and rushed, high pressure sales tactics. To learn about the specific signs of a pump and dump scheme watch the video.
Be sure to check back next Friday to learn another way pump and dump schemes create victims, those know as pump and dump enablers, and enter our contest!
To participate in the contest, read the You ASC’d blog and watch the corresponding video every Friday. Then test your knowledge with our Fight Financial Fraud quiz between October 28 and November 4. Quiz participants will be entered into a draw to win one of three $100 gift cards to Indigo Books, which we hope you’ll use to do even more reading about how to become a more informed investor. Click here for contest rules and regulations.
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