Let's look at the second part of the "Pump and Dump" scam - the dump.
The dump occurs after the fraudsters have managed to sell their overpriced stock. Like any good inside-trading scam, the perpetrators have the "inside information" that lets them sell the stock before anyone else has the knowledge that anything is wrong.
It is in the interests of the fraudsters to have a mass panic to entice others to sell the stock for the simple reason that the fraudsters want the opportunity to make the most money in the shortest amount of time possible. If the stock were to keep going up in value, then it would not make sense to sell the stock before it reached maximum value.
The dump occurs after the fraudsters have managed to sell their overpriced stock. Like any good inside-trading scam, the perpetrators have the "inside information" that lets them sell the stock before anyone else has the knowledge that anything is wrong.
It is in the interests of the fraudsters to have a mass panic to entice others to sell the stock for the simple reason that the fraudsters want the opportunity to make the most money in the shortest amount of time possible. If the stock were to keep going up in value, then it would not make sense to sell the stock before it reached maximum value.
NOTE: THE INFORMATION IN THIS BLOG IS NOT LEGAL ADVICE NOR
IS IT INTENDED TO BE LEGAL ADVICE. IF
THE READER HAS ANY LEGAL QUESTIONS, PLEASE REFER TO AN ATTORNEY.
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tausk
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