pump and dump

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Pump and Dump

An illegal practice in which investors attempt to artificially inflate the price of a stock by disseminating inaccurate or misleading information. These investors have a long position on the stock in question and seek to inflate the price in order to sell their shares for a higher profit. Pumping and dumping violates securities laws and can lead to hefty fines. Victims often stand to lose a good deal on pumping and dumping as the price of the stock usually falls to its previous level in a relatively short period of time.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

pump and dump

Market manipulation in which a thinly traded stock is accumulated, promoted, and subsequently sold at an artificially high price to unsuspecting investors. Internet chat rooms where investors gather investment information from unknown parties facilitate this illegal practice. Compare poop and scoop.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Pump and dump.

In a pump and dump scheme, a scam artist manipulates the stock market by buying shares of a low-cost stock and then artificially inflating the price by spreading rumors, typically using the Internet and phone, that the stock is about to hit new highs.

Investors who fall victim to the get-rich-quick scheme begin buying up shares, and the increased demand drives up the price. At the peak of the market, the scammer sells out at a profit, shuts down the rumor mill, and disappears. The price of the stock invariably drops dramatically and the investors who got caught in the scam lose their money.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
"We allege that Toomer abused his role as a financial advisor to help create the false appearance of market demand in these stocks and facilitate the pump-and-dump scheme," Andrew Calamari, regional director of the SEC's New York office, said in a statement.
Sophos have warned users to be wary of emails offering unsolicited financial advice as a married couple are charged by federal regulators with making $1 million through a stock market pump-and-dump scam.
Pump-and-dump schemes involve a scammer hyping a stock online so that many buy into it, sending the shares (and his profits) skyward.