Pump and Dump

I have nothing against syndicates ramping up microcap stocks.

However, I do object to syndicates running an online pump-and-dump scheme. It's high time MAS and CAD put a stop to these kind of illegal shenanigans.

(05-05-2015, 11:54 AM)getrich Wrote: I have nothing against syndicates ramping up microcap stocks.

However, I do object to syndicates running an online pump-and-dump scheme. It's high time MAS and CAD put a stop to these kind of illegal shenanigans.

It depends on what is "pump-and-dump" scheme. As long as no misrepresentation, a sale talk may be a "pump-and-dump" scheme, which has nothing wrong, IMO

(05-05-2015, 04:07 PM)CityFarmer Wrote:

(05-05-2015, 11:54 AM)getrich Wrote: I have nothing against syndicates ramping up microcap stocks.

However, I do object to syndicates running an online pump-and-dump scheme. It's high time MAS and CAD put a stop to these kind of illegal shenanigans.

It depends on what is "pump-and-dump" scheme. As long as no misrepresentation, a sale talk may be a "pump-and-dump" scheme, which has nothing wrong, IMO

Here's what Arthur Levitt ex-chairman of the SEC says about pump and dump, "A pump-and-dump is really buy, lie and sell high."

Arthur Levitt on the Jonathan Lebed pump and dump case, "(Lebed) used fictitious names. He made predictions...without any foundation," says Levitt. "The purpose...was not to help investors...but rather to line his own pockets as soon as he hyped the price of the stock."

http://www.cbsnews.com/news/pump-and-dump/

(05-05-2015, 06:54 PM)getrich Wrote:

(05-05-2015, 04:07 PM)CityFarmer Wrote:

(05-05-2015, 11:54 AM)getrich Wrote: I have nothing against syndicates ramping up microcap stocks.

However, I do object to syndicates running an online pump-and-dump scheme. It's high time MAS and CAD put a stop to these kind of illegal shenanigans.

It depends on what is "pump-and-dump" scheme. As long as no misrepresentation, a sale talk may be a "pump-and-dump" scheme, which has nothing wrong, IMO

Here's what Arthur Levitt ex-chairman of the SEC says about pump and dump, "A pump-and-dump is really buy, lie and sell high."

Arthur Levitt on the Jonathan Lebed pump and dump case, "(Lebed) used fictitious names. He made predictions...without any foundation," says Levitt. "The purpose...was not to help investors...but rather to line his own pockets as soon as he hyped the price of the stock."

http://www.cbsnews.com/news/pump-and-dump/

Lie is misrepresentation, is illegal under Rules, and SFA. The hardest part is to determine the "misrepresentation".

So in short, as long as no lie, it shouldn't be concluded as "pump-and-dump".

Pump and Dump scam
http://www.mas.gov.sg/moneysense/underst...ities.aspx

• A company may post a glowing press release about its new venture or profits. The company may then become an unwitting victim of a pump and dump scheme.
  
  
• Fraudsters may buy stocks of this company. Fraudsters then post stories on bulletin boards, blogs or forums on the attractiveness of the stock. Often, there is no way to verify the authenticity of these posts.
  
  
• Investors may then rush in to buy the stock, resulting in the stock price of the company being pushed upwards.
  
  
• Fraudsters then sell their stocks at a profit. After they have sold their stocks for a profit, the stories cease and the stock price of the company falls.
  

Hype and Dump
https://www.jpmorgan.com/directdoc/singa...ndbook.pdf
This involves talking up the price of securities, using false or exaggerated reports, rumours, broker recommendations and other communications. Once the price of the securities has risen, the manipulator dumps the relevant holding.

(06-05-2015, 06:06 PM)getrich Wrote: Pump and Dump scam
http://www.mas.gov.sg/moneysense/underst...ities.aspx

• A company may post a glowing press release about its new venture or profits. The company may then become an unwitting victim of a pump and dump scheme.
  
  
• Fraudsters may buy stocks of this company. Fraudsters then post stories on bulletin boards, blogs or forums on the attractiveness of the stock. Often, there is no way to verify the authenticity of these posts.
  
  
• Investors may then rush in to buy the stock, resulting in the stock price of the company being pushed upwards.
  
  
• Fraudsters then sell their stocks at a profit. After they have sold their stocks for a profit, the stories cease and the stock price of the company falls.
  

Hype and Dump
https://www.jpmorgan.com/directdoc/singa...ndbook.pdf
This involves talking up the price of securities, using false or exaggerated reports, rumours, broker recommendations and other communications. Once the price of the securities has risen, the manipulator dumps the relevant holding.

Besides pump and dump, we should also be aware of people who will talk down stocks. Muddy H2O try it on Olam and fail miserably. It is now on Noble and again they will face the same fate.

Share prices normally take a long time to rise but it can fall very fast if rumour mongering gathers momentum. That is why many syndicates like to short instead of long a stock. It is more lucrative shorting a stock then longing a stock

(06-05-2015, 07:08 PM)littleones Wrote: Besides pump and dump, we should also be aware of people who will talk down stocks. Muddy H2O try it on Olam and fail miserably. It is now on Noble and again they will face the same fate.

Share prices normally take a long time to rise but it can fall very fast if rumour mongering gathers momentum. That is why many syndicates like to short instead of long a stock. It is more lucrative shorting a stock then longing a stock

MAS and CAD should really start to crack down on syndicates running online pump-and-dump or short-and-distort scams. If they don't, I'm afraid things are going to get much worse.

The definition of "pump-and-dump" and "Hype and Dump/Slur and Slurp" by JP Morgan in Singapore context. The definition consistent with my understandings.

https://www.jpmorgan.com/cm/BlobServer/s...MungoBlobs

Pump and Dump
This involves transactions at successively higher prices, giving the appearance of real activity
by investors then dumping or selling at highs. This can occur as a supply side manipulation as
well as by making undisclosed offers for only small parcels of securities thereby inducing
others to sell and allowing the manipulator to later buy a large parcel of those securities at a
cheaper price.

Hype and Dump/Slur and Slurp
This involves talking up the price of securities, using false or exaggerated reports, rumours,
broker recommendations and other communications. Once the price of the securities has risen,
the manipulator dumps the relevant holding. Slur and slurp is the opposite of hype and dump
and occurs when the price of a security is talked down, allowing the manipulator to buy
securities at lower prices.

(06-05-2015, 08:59 PM)CityFarmer Wrote: The definition of "pump-and-dump" and "Hype and Dump/Slur and Slurp" by JP Morgan in Singapore context. The definition consistent with my understandings.

And why is that? Both MAS and SEC have the same definition of pump-and-dump.

I have split the topic out, to avoid disruption to the previous thread.

Regards
Moderator