Pump and dump scams are investment scams in which a scammer acquires stock (usually of little known OTC stocks), then drums up demand (often via spam emails) and offloads their stocks at inflated prices.
Steer clear of any stock promoted via spam: Their prices will collapse no later than when the spamming stops and people realize there are no other buyers. Such stocks can become near impossible to sell. In any case, a buyer will have lost most of their investment.
One such stock currently being promoted is Pengram Gold Corp. (PNGM). The spamming started around March 9, 2013 and trading volumes went up in the next couple of days.
Here is a spam sample:
Pre Announcement! Major Momentum is Brewing for This Beast.
Trade Date: Thu, Mar 14th, 2013
Company: Pengram Gold Corporation
Trade: P NG_M
Closed Price: .027
Long Term Target: $0.20
It Releases Breaking News! Our New Pick Under A Penny!!!
Right up to that day and from one week before, they had been spamming stocks of GOLD & GEM STONE MINING, INC (GGSM):
Morning Dip spells Big Opportunity. It Should Continue Upward
Date: March, 4
Company Name: Gold and GemStone Mining, Inc
Tick: GG SM
Latest Pricing: .017
Short Term Target Price: 0.35
You Need To Read This Story. This week is going to be even
better than the last.
From Feb 17-21 it was stock of Microelectronics Technology (MELY):
This Stock Continues to Climb!!! We are on fire..
Trading Date: Tue, February 19th
Company: Microelectronics Technology
Closed at: $0.0163
9-Day Target: 0.10
It continues soaring! Are you missing out? Building a strong
support for a push higher!
It only takes the scammers a couple of days to unload their existing stock, then they start promoting the next one.
Occasionally the US Security and Exchange Commission (SEC) will suspend stocks involved in such trading patterns, as it did in 2011, to protect potential buyers from being scammed.