o How Pump & Dump Works o What to do if you think you may be a victim o Current Pump & Dump Suspects [DMR] o Previous Pump & Dump Suspects o Links to key posts in this thread o External Links

This thread is work in progress, is reserved for a discussion of the Pump & Dump process, and to flag up UK stocks that people feel may be currently subject to that process. The intention is to keep the 'meat' of the content in the header, which will be frequently and regularly updated from any posts made to the thread. I'll also use the main thread as a change control to record and audit updates to the header. If you have been the victim or perpetrator of a pump & dump, I would welcome your comments and stories (anonymously if preferred) as posts to the main thread. I will include extracts from them, and links to them in this header. If you prefer, you can click on my username and email me your stories through the MoneyAM internal mail system

How Pump & Dump Works

Pump and Dump schemes are a technique used by devious and immoral traders on thinly traded stocks to con unwitting and unsophisticated traders out of their savings and to make huge profits for themselves.

Candidate stocks are typically low liquidity penny shares with a history of low volume that suddenly hit the limelight when one or more energetic, enthusiastic and ebbulient posters 'discover' them and claim them as hidden gems. The usual scenario is that despite no change in the rate or quality of newsflow there is a rapid rise in volume, a disproportionate rise in price signifying accumulation and pump with little or no selling, an exhaustion peak and then a rapid return to previous levels or thereabouts, with our ebbulient posters moving on to pastures new. Price and volume usually then return to normality.

A pump and dump scheme usually has the perpetrator buying at low levels for some weeks prior to the pump stage, after which they promote the share, typically via BBs and/or mailing lists. They may buy a few during the pump and make sure everyone knows that they're buying, but they'll also sell a few more to take profits. It's the victims of the scheme who buy the shares the fraudster is selling.

When the fraudster thinks that she's unable to inflate the price any further, or has reached her profit targets, she'll start selling a lot harder. This is the 'Dump' stage of a pump and dump. She'll claim on the BBs that holders should 'keep the faith', she'll blame the shorters, she'll try to encourage people to top up and she'll promise lashings and lashings of jam tomorrow. She may buy a few and publicise the buys just to cover her tracks. But on the whole, she'll be selling.

At this point, the price may yoyo a little but the fraudster's selling is putting an overall downward pressure on the share price.

At some stage soon we get a 'race to the exit'. Some of the mugs who have been suckered in, start to realise what's happened and they too sell. The fraudster sees the sells, realises the game is up and dumps all of her remaining holdings.

The price drops, often by as much as 75% in a matter of days or hours. Those who are lucky enough to get out do so. The first ones to get out see a small profit or a small loss. Those who aren't so lucky typically leave the share certificate in a bottom drawer somewhere, determined to wait until they can get their money back before selling. Usually they never do. Some will wait forever, and have effectively lost their whole investment, others may sell a year or two later, perhaps at 1% of their purchase price.

What to do if you think you may be a victim

If you're reading this then you've already got over the first hurdle - denial. Most traders suckered into these schemes refuse to recognise that they're being conned despite warning signs that are so obvious in retrospect. A significant number remain in denial for many years after the price has collapsed and never get around to selling - a phenomenom psychiatrists call 'cognitive dissonance'.

If you've bought into a pump and dump and have recognised it for what it is, you're probably wondering what to do. Chances are, you're thinking "I can't sell yet cos its not quite covered my buy price .... just a few more fractions of a penny and I'm out".

So What do you do?

Firstly - you need to ensure that the money you have invested into the share is within your comfort zone. Ask yourself "Will I mind if I lose it all?" If the answer is "no, I'm happy to lose the lot", then play this however you see fit. Maybe you'll make some money, maybe you'll lose your entire investment.

If it's "I daren't lose it all, I wont be able to face my bank manager /partner /kids /parents /landlord/ gasman" (delete as appropriate) then you need to take a long hard look at the way you trade, and you *must* reduce the size of your holding to the level where you don't mind losing all of what's left - even if you have to take a small loss on the tranche that you sell. Bad tasting medicine, I know, but infinitely preferable to the alternative. Get yourself onto a risk management course. I would expect www.glomtc.com to run courses along these lines.

Although pump and dump schemes are illegal worldwide, succesful prosecutions are rare and almost non-existant in the UK. The highest publicity case in the USA related to a 14 year old boy who was eventually fined more than $250,000 having made much more than this through using internet BBs and spam mail to promote and then dump his penny stocks.

The highest profile UK case was probably the Daily Mirror City Slickers scandal that eventually came to court in November 2005. The court heard that Piers morgan bought 66,000 worth of Viglen shares the day before the Mirror tipped them. James Hipwell also bought 36,500 worth which he sold at 9.00am the next day for a profit of almost 20,000. Also tried was a BB Poster whose real name is Terry Shepherd - he was accused of forming part of the conspiracy.

Trade suspect shares if you must - but keep your wits about you.

Current Pump & Dump Suspects Dimension Resources - DMR

EPIC: DMRName:Dimension ResourcesCategory: Illiquid Penny ShareNMS: 3000Current Phase: PUMPAccumulation Started: Around July 2005Pump Started: Late October 2005Dump Started: Awaiting Data

Previous Pump & Dump Suspects

EPIC: CFPName:City Financial associatesCategory: Illiquid Penny ShareNMS: TinyAccumulation Started: est Jan 2004Pump Started: 31/03/2004Dump Started: 28/04/2004Maximum Loss To Victims: 81%

Links to posts within this thread Posts 2,3 and 4 on page 1 of this thread are typical indicators of the pump stage of a pump and dump scam. The scammer cross-posts buy recommendations for their stock on multiple threads, and points to their previous pump and dump scams as successes. Naturally, they only mention the low (where they bought) and the high (where they exited). The victims bought at those highs and will probably never see those prices again. Those victims have been well and truly conned out of their money, and many will never realise how and why they were deceived. External Links SEC Article Wikipedia 14 year old fraudster Investopedia link

My best buddy, blinger can probably explain. He shorts a share at its very bottom, it never drops lower than that and he claims massive profits from trading it.
I know hes kind of the opposite from what the thread is about, but his mathmatical slant may help explain the missing 600%.

thanks boys, i think we all know where sh is coming from.

CW. this week MFI , LLOY today

MM, It was Hoodless Brennan getting people in. Bloody rubbish, I sold soon after thank god !

How you can put LLOY and sue helen in the same breath is beyond me. LLOY has been worth it for ages just for the divi. Today's rumours will certainly bring in a few spivs though.

Can we have NWG tomorrow? It's the only utility not pushing new highs every day and I've got bundles of stock

glad found this thread... MRP is ramped

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I think this thread's great. It helps to provide some credibility for moneyam as a bb. But although I dare say I may be in denial I hope MRP is not being ramped. It does look to have good fundamentals from what I can see, pe of 7.8 and profits 5 mil against market cap of 25 mil. It's got positive write ups from many tip sheets recently, (although I grant you this could be ramping of a sort, I don't know) and the naked trader says he has bought a lot at 20p, if true, I normally think he's quite a good picker. Isn't there some ambiguity because a lot of small shares rise for a few days through momentum traders after a piece of news.

Shouldn't pump and dumping only apply to shares where there has been no newsflow, no "something new" to warrant a re-rating etc. You could argue that shares like afd this week have risen too much on such news, victoria oil, central african mining and central asian whatever it is. But there has been something concrete in each case, regardless of whether traders have valued the piece of news too highly.

I'm concerned by shares and bbs for meridean petroleum, chaco? eme etc. Meridean has people on the bb saying there's going to be great news, hold on, etc etc, but the ambiguity with shares like chaco and eme is that there seems to be no shortage of traders willing to buy them so it becomes a "fool's market" where there's always a chance of selling it at a higher price to someone more stupid than yourself. So as long as everyone knows this it's okay. And with regard to the oil boom, how do you value them? VOG at 2.70 because of some broker's note that's been doing the rounds since the initial discovery.... How much of the gas can they get out, at what price etc?

But on the other hand I have contributed to boards for ADN, and ENN and there is very little interest in these brilliant shares. Maybe it would be good to start a board for boring shares with great fundamentals that keep going up gently. The ones you don't have to worry about every morning in case they've crashed.

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Saintserf, I have bought MRP shares... but still feel they are being ramped. I hope they do well... Still i hate rampers. I think these threads should be used to genuinely help each other, you soon start to know which names to trust...

getting back to the thread .... What does the panel think about SER ? Is the a "pump and dump" excercise in progress -checking out the recent RNS I reckon I have seen more oil in a drip tray than they make in a month - mind you was quite a big drip tray

For what its worth, I think that all "hole in the ground" companies are prime candidates for pump and dump.
Its not my area of interest but it seems to me that a company with a hole that promises to yield oil, gas, gold, minerals, diamonds etc. will always be very susceptible.
Before profits arise the data from testing is open to whatever interpretation you may wish to put on it. I know for a fact that a soil analysis from my back garden would show traces of all kinds of elements, and a good pump and dumper could present them to show I was sitting on a gold mine, literally. Unworkable and unprofitable. But not to the pumper.
I am very wary of any company that is not currently producing, and I miss a lot of gushers that way, but I think i miss the real pump and dump stuff as well.
Alan

al - even more extraordinary (i find it quite incredible) is firms like xstrata who are producing massive amounts of goods, are expanding and looking for aquistitions, profits increasing at incredible rates are trading on a PE of 8.5. ser, sey, tag, mrp all have minus or no pe. i dont get it! investors seem to invest more in companies that MIGHT find something to sell as opposed to those that have.

Go back to the TECH BOOM.

Mining and oil etc. smells a little like that period IMHO.

Personnel. I think it is worthwhile finding out more about the people connected to the company - CEOs, director's accountants, senior staff, promoters, major backers, those carefully keeping them,selves out of the spotlights etc. Then compare characteristics with your own experiences of two-faced smilers, back-stabbers, bullies, cheaters, liars, smooth-talkers, fancy-dressers, double-dealers, name-droppes, spinners, asassins, cheaters, slackers, maggots, etc ... Not necessarily indictions of problems but a very helpful start.

ax or anybody else - do you anything about sutcliffe at alexander mining (axm)??

for anyone interested



Gausie is a respected poster of many years standing.......having read hundreds of threads in my 15 year skirmish with the stockmarket i am unable to give SueHelen a similar accolade.

I'm afraid I have to take issue with one of the points you make Kivver. I like what you say about xstrata. I think all the big miners are good because I think we're in a long bull run for commodities, eg. about another 10 years or so. But MRP is on a prospective pe of 7.8 I think, . It depends how you calculate PEs which is murky, historic or prospective etc.

I am concerned too about the vituperative nature of sue helen's postings. It's the same as one of the rules of debating, when you start using insults, getting personal, losing reason and objectivity and becoming passionate using words that mask debate, like "sure thing", "clearly", "obvious" "no doubt" etc. When you start to get too excited just dip your reading fingers into any books by Peter Lynch, Warren Buffet or Benjamin Graham, they will temper your excitement and help you to see clearly. MRP may be dodgy, I agree but it's also a potential turnaround I think with these results.