“Churning”, “Front Running” and “Pumping & Dumping”

BE ALERT AND BE AWARE

By Dr. David E. Marcinko MBA CMP®

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Front Running (Definition, Examples) | How Traders Use it?

Churning: The practice of a provider seeing a patient more often than is medically necessary, primarily to increase revenue through an increased number of visits. A practice, in violation of SEC rules, where a salesperson affects a series of transactions in a customer’s account which are excessive in size and/or frequency in relation to the size and investment objectives of the account. An insurance agent who is churning an account is normally seeking to maximize the income (in commissions, sales credits or mark-ups) derived from the account.  

FRONT-RUNNING: Form of market manipulation where a broker/dealer delays processing of a large customer trade in an underlying security until the firm can execute an options trade in that security in anticipation of the client’ s trade impact on the underlying security.

Pump and dump: A a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme “dump” their overvalued shares, the price falls and investors lose their money.

Citation: https://www.r2library.com/Resource/Title/0826102549

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2 Responses

  1. California man arrested for alleged $9 million penny-stock fraud

    https://www.msn.com/en-us/money/markets/california-man-arrested-for-alleged-dollar9-million-penny-stock-fraud/ar-AAMulVy?li=BBnb7Kz

    Dr. David E. Marcinko MBA

    Like

  2. MASS MUTUAL

    MassMutual was just slapped with a stunning $4 million fine by the state of Massachusetts for allegedly failing to supervise the activity of Keith Gill, a former agent of the insurer’s broker-dealer and RIA business. You probably know him better as “Roaring Kitty,” or perhaps even as “DeepF***ingValue” if you spend too much time on the internet. He’s arguably the ringleader of the GameStop circus from earlier this year.

    Though Gill testified to Congress that he’s not a financial advisor and was not manipulating congress, William Galvin claims he executed at least a few GameStop trades for more than $700,000 while employed by MassMutual.

    As far as I’m aware, it’s the first major action tied specifically to the Great Meme-Stock Craze of 2021, but it likely won’t be the last.

    Anonymous

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