(The folks doing the "pumping & dumping" WRITE those "Newsletters"....)
Now if you want in on a REAL investment opportunity, there's this bridge in Brooklyn that is about to come onto the market, and if you like I MAY still be able to get you in on the deal....
No it isn't illegal, but you might find yourself down 30-40% of your investment quite quickly. Odds are low that you will get in at the right time to make a profit, since the pumpers and promoters are already running the game stacked in their favor
Another problem with penny stocks is illiquidity. Some time ago, I "invested" $4000 in a penny stock during a promotion. In one minute I was down $75. 3 minutes later it magically changed to $715 profit. Not bad huh? $715 for a few clicks and a less than 5 minute wait? But hold on....Illiquidity. I could not sell...Tried lower...and lower...and lower....til finally I got frustrated (and a bit scared) and sold at a $70 loss
Well it should be illegal!
I am not American but OTC and BB are not regulated instruments, neither are they traded on a recognised stock exchange so they seem to escape the "market abuse" rules. If theyy were listed, then yes, it must be illegal (market manipulation, market abuse, inside information or front running)
If I had a secret path to a million dollars in two years - would I send out an email to a hundred thousand unknown strangers telling them what my secret was? Even if you had genuine solid information that a penny stock was about to announce a development that would shatter your wildest dreams about technology - i.e. a device that would make your car run on tap water - wouldn't I buy as much of the stock BEFORE I sent the email?
Now suppose I'm not the most honest person in the world and the "Run the car on tap water" was a tiny bit untrue - I could still unload my stock for two to three times my initial investment by sending the same email. This is pump and dump. You don't get valuable coroprate secrets in an email from a stranger. At the bottom of these emails it says something like this:
Blah blah Stock Expert Pickers is remunerated in stock for making these unproven claims about XXX corp. No attempt has been made to check the facts etc.
Here's a tip - look up the SEC filings for the penny stock - and look at the 10K annual report - see if the company has any revenues of a few millions in the last twelve months before deciding to invest. If they actually had revenue then they might actually have a business worth investing in.
Illegal - No, Stupid - Yes
After 45+ years in this industry, still meeting people dumb enough to buy into this crap.
PT Barnum always said, there's one born every minute
If you're dumb enough to buy into stocks that professional or experienced traders tell you not to buy, and even the government tells you not to buy - go for it
no it is not illegal, but honestly it is just not recommended. I wouldn't do this, even though it seems cheap, this is because the chance of making a profit is low. the only guy making a profit is the person that sells you the penny stocks
I know how risky investing in Penny Stocks are. The question I have is, is investing in pump and dump stocks illegal? I don't do any of the pumping, I get news letters from different websites about good penny stocks to invest in. If I receive those email and invest in the companies that they recommend and make a profit is that illegal?
