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

not too bad ta tonker, and you?? no nothing of the share above, but good luck.

I am not bad... feeling good about the LCP, think as soon as the share becomes better known it will do well.... 11.4% up already ( on first day though)... This one has a China spin to it so hopefully it will see the blue sky... What do you think of Eastern Europian property companies... ther are a few new floatations coming up, will be keeping a close eye on them

Theres a hilarious version of pump and dump going on on the new YOO thread.
Of course in this instance its a bad-mouth and buy scam.
The SP may well drop, and the company may be a bankrupt shell, but the guy posting the nonsense he does is a transparent amateur.
Excellent research material for how to spot a scammer, and I commend it as study material, or if anyone just fancies a bloody good belly laugh.
Alan

Tonker,
at least one of the flotations coming up has been subject to a boiler room type operation, pre float, as i have been contacted myself.
Be careful.
Alan

yes tonker, be careful, you seem to look in areas ive hardly heard of (not to say that is a bad thing). Share dealing and investing is a masive learning curve, and the promise of quick buck is always tempting and I still fall for it. The majority of my money now goes in shares that i watch before i buy, and have solid, concrete, actual real evidence of progression (shares i have shared with you before). But still cant help putting some small amounts of money into highly promoted shares on BB's like TAG (again i think it will come good) but still cant help being nervous because it has gone alll pear-shaped before with PET and BLVN.

other shares i want to have a good look at are;- rolls royce, bae systems, hardide, hydro consulting (or summat like that), st modwen properties, mccarthy and stone, and particularly like the look of areo inventory, but more research to do first.

Kivver,
I'm in HYC and have done very well (by my poor standards).
Its a real company, with a real product / service so it doesn't attract the BB crowd as much as others do.
Have a look at ITR and PCM if you fancy a flutter.
Alan

hewittalan6,

Out of interest, which IPO coming up has been the subject of a boiler room type operation please?

Can't remember the name now, but it started with an "A", and was being hugely pumped by an American outfit.
The name sounded very like a well known plc, but wasn't.
i didn't hang around on the phone too long, but it was simply a group who already develop property floating to take advantage of vast tracts of land they own in Croatia and Bulgaria.
it will come to me and I promise I'll post it on here when i remember.
Sorry i can't be more precise.
Alan

The Boiler Room, BTW was Oxbridge International.
Alan

The new floatations i was thinking about were Bulgarian Land Developement and Pactolus Hungarian Property... both of them look kosha.... in fact Shares mag gave Pactolus Hungarian Property had a good write up 14/20... feel could be a good short...

A companion to P&D in aims, but with a different approach...

Shares soar but cheats prosper

"...
INSIDER dealing is widespread in the City and getting worse despite new rules designed to crack down on it, the Financial Services Authority admitted yesterday.
...
In figures suggesting rampant abuse, the FSA found evidence that insider dealing was taking place before 29 per cent of the takeover announcements it investigated and before 22 per cent of company trading statements.
...
Even now, the FSAs 2,000 officials have been accused of failing to catch the big fish, while enmeshing the innocent in copious red tape.
...
Last month, the FSA meted out fines of 750,000 each to one of Londons biggest hedge fund groups, GLG, and its former star trader Philippe Jabre for insider dealing. But this was regarded by some as a failure because it amounted to just a few weeks pay for Mr Jabre and a few days profit for GLG.
..."

always look out for people starting new threads, esp when people have contributed to the ones already out. suehelen was a master at this. why do it??? hide bad news perhaps???

Kivver

Give yourself a pat on the back because you are spot on, unless a new thread
is really needed when the original poster who started it has long gone and new
info or charts is needed to be added then it isthe basis of a pump and dump.

I'll give you a brilliant example on advfn, Tou, Touch group, 3 or 4 rampers on
the old thread, no need for a new one then one poster "thinkbig" starts a new
thread and it's all ramp, thing is it sent a clear message out to the readers that
its a pump and dump, they killed the trade, on Friday it was ticking along nicely,
then these rampers appeared and today nobody will touch it with a bargepole.

kivver, ravey,

Yes I agree, if the original thread starter is still around, the appearance of an alternative thread is often the first sign of a ramp.

AAIR looks to be being ramped at ADVFN today, nice 20% spread too!

cheers ravy, i agree, it puts me off instantly. Its a bit of dilemma with trafficmaster (tfc) because it has been a bit of a dog of late, but seems to be making a bit of a comeback (although a long time after kat started promoting it) and there does seem to be good evidence to suggest that. But the posters on that thread and the NEW one over do it, over hype it and it puts me off it. Do they know something we dont???

congrats on your 3 grand by the way.

Haas anyone any thoughts on the new EME thread? I don't know the poster but the style is a little worrying. I'm not throwing any accusations here but the commentary on the buys and sells is a little familiar.
Alan

Indeed EME and the other oil one that sounds similar. The problem with shares like chaco, meridian, etc is that they are fertile ground for pump and dumpers. I seem to remember sanctuary went up partly because there was apparently a tip doing the rounds from some penny tips sheet that it was worth 5p. A broker's note that Chaco's worth 2. HMM I wonder.

St. Mowden and the others you mention are good shares but maybe a little too boring. I like the FTSE 250 mid caps because they have the best of both worlds. eg. ADN, TLW, BUR AQP's doing well at the moment. Papal power's done some good work on Leadcom on the bulletin boards, it looks good.

classic pump and dump was GW Pharmaceuticals a few days ago...blatantly ramped up by the press[backhanders?] then the boys in the know dumped the afternoon before the next mornings RNS...classic pump and dump job verging on criminal

Its not always easy to tell the pumpers from the merely over-excited. There's been a lot of this on Desire Petroleum, thankfully not on this board very much. One guy over on another board has a shedload - far more than is good for him and then proceeds to get almost tearful when queries about his pie in the sky forecasts are made. I think that could be less of a pump and dump and more someone very in love with "his" company- and love can be unrequited!
Would it be reasonable to say that most people posting on a BB have got the shares and only want to hear good news so inevitably we have a vested interest in seeing a ramp?

maestro.

You have some nerve coming onto this thread and critising the press for
Gwp, everytime i looked in on the Gwp thread you were ramping the hell
out of it, in fact whenever i can i recommend readers filter you on advfn
as you are one very dodgy and misleading poster who cannot tell the truth
if your life depended on it.

You must have been banned on advfn because i have not seen your name
crop up of late but i bet you are back with a new handle, you are quite
dangerous on a financial bb to any new investor because you bullshit and
bullshit a lot...and that's not imho...that the truth