http://www.sec.gov/oiea/investor-alerts-bulletins/...
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors about fraudsters who promote a stock to drive up the stock price and then sell their own shares at the inflated price, making money at investors’ expense.
Fraudsters who conduct stock promotions are often paid promoters or company insiders who stand to gain by selling their shares after creating a buying frenzy and pumping up the stock price. The promoters or insiders make profits for themselves while creating losses for unsuspecting investors.
Fraudsters may promote a stock in seemingly independent and unbiased sources including:
- Social Media: Fraudsters may use social media to promote a stock anonymously or while pretending to be someone else. Read Investor Alert: Social Media and Investing -- Stock Rumors.
- Investment Newsletters: In some cases, an investment newsletter may promote a particular stock because the newsletter publisher has been paid to do so. Read Investor Alert: Investment Newsletters Used as Tools for Fraud.
- Online Advertisements: Fraudsters may purchase pop-up ads or banner ads that are targeted to a particular group based on demographics or interests. Ads may be fraudulent even if they appear on legitimate websites, including on the online financial pages of news organizations.
- Email: Email spam may indicate an email scam. Read Investor Alert: Don’t Trade on Pump-And-Dump Stock Emails.
- Internet Chat Rooms: Fraudsters often use aliases in Internet chat rooms to hide their identities and post messages urging investors to buy stock in microcap companies based on supposedly “inside” information about impending developments at the companies.
- Direct Mail: Fraudsters may send you high-end glossy mailers promoting certain stocks.
Microcap stocks (low-priced stocks issued by the smallest of companies), including penny stocks (the very lowest priced stocks), are more susceptible to stock price manipulation. ...
