Is pumping up penny stocks, short-selling and manipulating stocks illegal?
Is it illegal to Pump & Dump? Or push the price up then short sell a bunch and bash the stock to get people to sell?
Why is it illegal? (If it is)
But WHY? I always buy into penny stocks and I love Pump & Dumps. Easy way to make 4-5x your money.
I actually do go on stock message boards and pump up the stock. Is that illegal?
Yes it’s illegal, …. but try to prove it.
Pump and Dump and the corresponding Short and Distort is illegal but there’s no way they can enforce it given the large number of penny stocks out there.
In general, if they do catch a company doing it, the company execs are forced to pay a fine and they get a slap on the wrists.
It’s illegal because it’s a betrayal of faith. The information provided is intentionally misleading with the intent of profiting from the investors without the intent of actually having a chance of a suitable return on investment. Basically, it’s fraud.
Well, much depends on who you are if you are a market maker in the security or registered with your local state division of banking and insurance as a licensed financial adviser; if you are and you continue to make positive comments advising others to buy a security you are in fact selling at the same time you are telling others to buy, one possibly could face charges of fraud from the SEC (Securities and exchange commission) and FINRA http://www.finra.org/
The same applies in theory to individual investors who are not licensed, however, these cases are harder to prosecute and the SEC appears to go after them less often because they are harder to prove as the dynamics and news of a security are subject to constant change.