| Since the year 2004, there has been a sharp | | | | short selling (short selling is perfectly |
| increase in the amount of investment spam we | | | | legal; you borrow stock from someone else and |
| are receiving in our inbox. I personally | | | | immediately sell it, hoping that the price of |
| receive up to 10 emails per day containing | | | | the stock will go down in the near future so |
| offers or lures to invest in various scams. | | | | that you can buy it back at a lower price and |
| It is estimated that millions of dollars are | | | | return it to the lender at a profit). With |
| lost every year by people who have invested | | | | pump and dump short selling, the borrower |
| money in something they read about in an | | | | instantly sells the stock that was loaned to |
| email. For the purposes of this discussion, | | | | him and then goes around spreading bad rumors |
| we will outline each of the bogus investment | | | | about the company to drive the stock price |
| opportunities that are circulating the | | | | down so he or she can buy it back at a low |
| internet so that if you encounter one of | | | | price before returning it to the lender. |
| them, you will not be tricked into investing. | | | | |
| | | | You should ignore any emails you receive that |
| Pyramid schemes are probably the most | | | | promote offshore investing or prime banks. |
| popular. Typically, you will be asked to | | | | Promises of huge returns from offshore |
| invest a certain amount of money, and then | | | | investments are usually totally disingenuous. |
| you are promised a return when new investors | | | | Prime banks are the top 50 banks in the |
| make an equal contribution. Eventually, the | | | | world. Solicitors for prime banks will ask |
| pyramid either collapses or the person who | | | | for your money so that they can invest it in |
| initiated the pyramid is able to make a lot | | | | high yield prime bank financial instruments. |
| of money, but no one else makes anything. | | | | However, they will likely invest your money |
| | | | in high risk, speculative investment vehicles |
| A common scam associated with the stock | | | | that have absolutely no connection to prime |
| market is referred to as the pump and dump. | | | | banks whatsoever. |
| This is when a small group of investors who | | | | |
| hold a large number of shares in a penny | | | | I hope the information presented here has put |
| stock hype the stock to the general public. | | | | you on notice. But, you should not |
| The resulting frenzy drives up the price of | | | | necessarily ignore all of the investment spam |
| the stock, at which point the pumpers dump | | | | in your inbox. You might receive an email |
| their shares at a high price before the rest | | | | containing a stock tip that could turn out to |
| of the investors realize that the company is | | | | be very remunerative. Just make sure you |
| worthless. | | | | research the company on your own before you |
| | | | buy the stock so that you can make an |
| Sometimes, pump and dumpers will engage in | | | | informed decision. |