Perpetrators of a “pump and dump” scheme attempt to artificially boost the price of an owned stock through false, exaggerated, or misleading positive statements, then subsequently sell their positions after the puffery has led to a higher share price. Traditionally these schemes have been referred to as “boiler rooms,” which are essentially high-pressure call centers that solicit potential investors.
However, the internet has more recently provided additional channels to reach large numbers of potential investors. Such arrangements violate securities law and can result in significant losses to investors when stock prices fall after the process is complete.
To find out more about whether a particular type of fraud is actionable under Dodd-Frank, contact us today.