pump and dump legality?

Quote:

Originally Posted by nomaam 

Hello:

I am new to stock trading and am curious about the legalities of the "pump and dump" tactic.

I see many posts by members on this forum that are "pumping" or generating hype around a stock. It is almost garaunteed that these people invested in the stock befor hyping the stock on forums.

What seperates legal hype from illegal hype? What is the threshhold on the level of exaggeration or level of truth? I have search for some time but can not find a solid answer.

From what I understand it would be legal to make claims on what you believe the stock will do (the stock will jump by x %), but illegal to make up lies regarding supposid facts about the company (such as a pending accusition or investment.)

If someone could shed more light on the matter it would be much appreciated.

Thank you.

I think you pretty well nailed it. I would not buy from any pumping scheme although sometimes it can work for you. You just have to be aware of what's going on and why.

Thanks for joining.

What Bob said, I honestly love to mess with pumpers because they are that sad. 

Only person you should ever trust in trading is yourself. 

Let me calrify

Quote:

Originally Posted by nomaam 

Hello:
I am new to stock trading and am curious about the legalities of the "pump and dump" tactic.
I see many posts by members on this forum that are "pumping" or generating hype around a stock. It is almost garaunteed that these people invested in the stock befor hyping the stock on forums.
What seperates legal hype from illegal hype? What is the threshhold on the level of exaggeration or level of truth? I have search for some time but can not find a solid answer.
From what I understand it would be legal to make claims on what you believe the stock will do (the stock will jump by x %), but illegal to make up lies regarding supposid facts about the company (such as a pending accusition or investment.)
If someone could shed more light on the matter it would be much appreciated.
Thank you.

Let me clarify alittle better for you.. since its not only about being aware..

The legalities of it are forward looking statements and wording.. such as IF. Nothing is given a guarantee which removes any legal aspects to the recommendation or advice on the stock, by the pumper or company alike.

Its always within the word play and frankly.. any poster who guarantees something, is guaranteeing to take your money. Other aspects such as float and frequency of buys and insider transactions also need to me looked at.

There is a whole scope of infomation to review when your investing in pennies, where P&Ds generally occur.

The SEC has 1000s of companies doing this, and they get some for false reporting while others slip by.

I would go as far as saying you can do anything you want 'verbally' on the internet (on a 1 person pump and dump level, not a company wide mission). Tracing down someone to the exact person on the internet requires a subpoena. I don't think you'd reasonably pursue that, or get one for bad stock advice on an anonymous forum.

So yea, buyer beware is what I'm gettin at.