Protect Yourself from Investment Fraud: How to Avoid Being a Victim of a Pump and Dump Scheme
by: Ivan Cavric Pump and dump schemes are a type of investment fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. These schemes often occur on the internet through various forms of communication, including social media and messaging apps. Pump and dump schemes are illegal and are considered securities fraud by the US Securities and Exchange Commission. They can be harmful to individual investors who may purchase stock in a company that is being pumped, only to later lose money when the price drops after the dump. Here are some tips to help you avoid being a victim of a pump and dump scheme: 1. Do your own research: Don’t blindly trust recommendations from unfamiliar sources, especially if they seem too good to be true. Instead, take the time to research the company and its financial health on your own. Look at the company’s financial s...