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Ever received one of those emails that pretends to be TO someone else, passing on some hot stock tip they've learned? Referred to as 'pump and dump' scams, the intent of the email is to get lots of people to take advantage of this unexpected windfall of information and buy the stock. This inflates the price, at which time the scammers sell their shares for a hefty profit (and leave you with worthless stock). It works like this:
1.Scammers buy worthless stock at a very low price
2.Fake email is sent to millions of people, claiming the stock is projected to move
3.People buy into the scam, and thus buy the stock, thereby raising the price
4.The scammers sell off their holdings for a hefty profit
5.The victims are left holding worthless stock
Remember, if it sounds to good to be true, it is too good to be true. Respect your hard-earned money and avoid acting on stock 'tips' received via email.
this was originally published on about.com
1.Scammers buy worthless stock at a very low price
2.Fake email is sent to millions of people, claiming the stock is projected to move
3.People buy into the scam, and thus buy the stock, thereby raising the price
4.The scammers sell off their holdings for a hefty profit
5.The victims are left holding worthless stock
Remember, if it sounds to good to be true, it is too good to be true. Respect your hard-earned money and avoid acting on stock 'tips' received via email.
this was originally published on about.com
