Pump-and-Dump, Pump-n-Dump

Stock market fraud favored by organized crime. The gang take a share-holding or buys futures in a small, relatively thinly traded company – they then pump up the stock price by spreading positive but false rumors and stories about it. When this ramps up the company’s share price (pumps it), they then sell the shares or options for substantial profit (the dump.) Often the rumors the gang spread will be given the appearance of inside information, so that victims, worried about the potential illegality of their own actions, are hesitant to complain to the authorities. Small technology or pharmaceutical stocks are popular targets for a pump-n-dump; the result of such activity can be devastating for the company’s credibility, especially because the impression is given that the pumping and rumors started with that company’s management. E-mail spam is a popular way of pumping today.

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