Penny Stock and Investment Schemes



Top of a penny stock spam email from March 29, 2012

View Full Image

The Scam:

The rise in the Internet gave rise to the penny stock “pump and dump” schemes. The scammer would buy millions of shares of penny stocks then talk up the company through false press releases, email spamming, and other means to get investors to buy the stock. When the price rose as a result of investors buying the stock, the scammer would sell all of their stock for a profit – leaving the investors with severely devalued stock that was difficult to sell. This type of scam is less common today because the SEC is looking out for this type of fraud and market manipulation.

Don’t Get Fooled:

Just with any solicitation for a get quick rich scheme, do not engage or participate in these scams.