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Wednesday, March 09, 2011 2:16:35 PM
This often occurs through internet promotion. A scammer will send a message telling people to hurry and buy the stock before the price goes "To the moon". They'll usually claim to have "inside information". In reality, they are usually company insiders or paid promoters. Unwitting investors then purchase the stock, creating high demand and raising the price. This seemingly "real" rise in prices can entice more people to believe the hype and to buy shares as well.
Once the fraudsters "dump" their stock by selling it at the inflated price, they will stop hyping the stock, and the investors lose money.
They then change their name and management and REPEAT the above process!
Sound familiar?
“There are three kinds of men. The ones that learn by readin’. The few who learn by observation. The rest of them have to pee on the electric fence for themselves.” –Will Rogers
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