PUMPERS & DUMPERS: Social Media Influencers Charged in Scheme

Posted on December 16, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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DEFINITION: Pump and dump (P&D) is 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” (sell) their overvalued shares, the price falls and investors lose their money. This is most common with small-cap cryptocurrencies and very small corporations/companies, i.e. “microcaps“.

CITE: https://www.r2library.com/Resource/Title/082610254

While fraudsters in the past relied on cold calls, the Internet now offers a cheaper and easier way of reaching large numbers of potential investors through spam email, investment research websites, social media, and misinformation.

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And so, Federal prosecutors and the SEC have accused seven popular Twitter and Discord users of wielding social media to manipulate stock prices—pumping the shares and then selling off mass quantities for profit once they rose.

An additional defendant, whose Twitter handle was @DipDeity, was charged with aiding and abetting the alleged fraud for hosting a podcast that featured and promoted the seven influencers as skilled traders to follow.

Each influencer charged had well over 100,000 followers and, according to the SEC, the group earned about $100 million total in the scheme.

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ORDER: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

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