Article I read on different scams one is the dump and pump which is not too well known. This I beleive applys to rays and you can see all the elements in play here. But all things have a good and a bad. We will be here for the pump part as the stock returns to its proper share value.
For really good penny stocks listed on the OTC and OTC BB and even good solid stocks on a stock exchange, the stock basher's purpose for demoting a stock is first to make money off their shorts. This is the dump.
Then, to buy up shares after the share values plummet to a new bottom created by the marketeer demotion. Then they begin promoting the stock. The stock must trend up again, because it is worthy. This is the Pump after the Dump.
• They (the stock bashers) demote stocks using similar sources of media that marketeers promote stocks, but concentrate their efforts in news letters, message boards, chat rooms, and financial articles.
• The basher almost always works in groups or teams with a specific plan of attack in mind, will trade passwords, and use different aliases and computers to hide their identities.
• They write negative factual information leading to baseless allegations of fraud to the Securities and Exchange Commission (SEC) and other government agencies, and to suppliers, contractors, partners, major investors, etc.
• The reason for this campaign of destruction is hopefully to cause the struggling company to at least temporarily lose credibility. The purpose of all this is to show that their allegations are correct, that the company is being investigated or even sued for fraud and is a sham.
• The basher will pretend to be helpful in warning and alerting traders of the "scam" stock. They encourage you to sell and cut your losses before the stock sinks further, is delisted, or becomes extinct.
• The purpose of the stock basher in this particular penny stock scam is to make a good profit off of their shorts (or the naked sell orders of broker-dealers) from penny stocks that are listed on a stock exchange and the OTC as the shares of stock are being dumped by rattled investors and traders.
When the shares sink far enough, the bashers then buy back the shares they shorted for a future profit. They will then begin promoting it - this creates the Pump after the Dump.
• As noted before, OTC stocks can be shorted, but shorting thinly traded OTC stocks are restricted by many reputable brokers to protect their clients from losses. Shorting thinly traded stocks can be extremely risky. I strongly advise against shorting penny stocks.
This type of penny stock scam affects the entire company, not just the stock's share prices. An already good company will likely recover after the dump and pump is complete and now becomes the target of marketeer promoters. The bashers likely become the promoters, after the bottom is reached.
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