SEC & FINRA Joint Alert: Beware Pump-and-Dump Scams via E-mail Spam

Attorney Advising Disclaimer

The SEC and FINRA are warning investors of dangerous investment-related e-mail spam that promotes a securities fraud scheme known as "pump-and-dump."

In the alert, regulators warn of unsolicited e-mails, Facebook, Twitter and other online postings that promote a microcap—or small—company's stock, often falsely claiming to have "inside information" about an imminent move that will prove highly profitable for all who invest in the near future.

Meanwhile, other fraudsters entice investors to buy stock of an "infallible" business or to invest in a new game-changing technology that is sure to generate tremendous profits and return. These messages are often short and even vague, designed to generate interest and investments.

This sudden influx of investments serves as the "pump" of the scheme, artificially driving up the price of the stock and setting up part two of the scam: the "dump."

In the "dump" phase, the fraudsters suddenly sell their own shares of the stock, while simultaneously stopping the stock's promotion and spam e-mails. This results in a dramatic price fall of shares, generating significant losses for investors.

FINRA and the SEC compare this electronic scheme to boiler room sales operations that inundate investors with false or misleading information about a company in an attempt to artificially inflate a price.

Though an e-mail spam filter often catches most of these fraudulent messages, some may slip through the cracks and even appear to be a legitimate business venture. If you have invested in an electronic pump-and-dump or another like fraudulent scheme that has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

Investor Alert: Don't Trade on Pump-And-Dump Stock Emails (SEC)

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