Editing Pump and dump (section)

{{Short description|Form of securities fraud}}
{{Other uses|Pump and dump (disambiguation)}}
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[[File:Bubble.folly.jpg|thumb|right|"Night wind hawkers" sold stock on the streets during the [[South Sea Bubble]]. (''The Great Picture of Folly'', 1720)]]

'''Pump and dump''' ('''P&D''') is a form of [[securities fraud]] that involves artificially inflating the price of an owned [[stock]] through false and misleading positive statements (pump), in order to sell the cheaply purchased stock at a higher price (dump). Once the operators of the scheme "dump" (sell) their [[Overvaluation|overvalued]] shares, the price falls and investors lose their money. This is most common with small-cap [[Cryptocurrency|cryptocurrencies]]<ref name=":0">{{Cite journal|last1=Xu|first1=Jiahua|last2=Livshits|first2=Benjamin|year=2019|title=The Anatomy of a Cryptocurrency Pump-and-Dump Scheme|url=https://www.usenix.org/conference/usenixsecurity19/presentation/xu-jiahua|journal=28th USENIX Security Symposium (USENIX Security 19)|language=en|pages=1609–1625|arxiv=1811.10109|isbn=978-1-939133-06-9}}</ref> and very small corporations/companies, i.e. "[[Microcap stock fraud|microcaps]]".<ref name="sec">{{cite web |url=https://www.sec.gov/answers/pumpdump.htm |title=Pump and Dump Schemes |publisher=U.S. Securities and Exchange Commission}}</ref>

While fraudsters in the past relied on [[cold calling|cold calls]], the [[Internet]] now offers a cheaper and easier way of reaching large numbers of potential investors through [[Email spam|spam email]], [[Securities research|investment research]] websites, [[social media]], and misinformation.<ref name="sec"/><ref>{{cite web |title=Wake Up and Smell the Pump-and-Dump |url=https://www.finra.org/investors/insights/avoid-pump-and-dump-scams |website=Finra.org |publisher=Financial Industry Regulatory Authority}}</ref>