A Pump-And-Dump is a fraudulent scheme in which a group of individuals or organizations manipulate the price of a security, such as a stock, by artificially inflating its value and then selling it at a profit.The scheme typically involves promoting the security through false or misleading statements, such as exaggerated claims about the company's prospects or its performance, in order to create demand for the security and drive up its price.Once the price of the security has been artificially inflated, the perpetrators of the scheme will sell their positions in the security, typically at a large profit. This often leads to a sharp decline in the price of the security, as other investors who were lured into the scheme by the false or misleading statements realize that they have been duped and sell their positions as well.Pump-and-dump schemes are illegal in most countries, including the United States, where they are prosecuted by the Securities and Exchange Commission (SEC).The SEC has the authority to bring enforcement actions against individuals or organizations that engage in pump-and-dump schemes, and it can also seek civil or criminal penalties against them.Pump-and-dump schemes can be difficult to detect, as they often involve complex financial instruments and sophisticated marketing techniques.However, investors can protect themselves from these schemes by being aware of the risks and by being cautious about investing in securities that are promoted through exaggerated or misleading statements. It is also a good idea to do thorough research on any investment before making a decision, and to seek out independent sources of information.
