Pump and Dump and Stock Swap Scams

Financial Conduct Board is cautioning investors of a two-stage stock trick involving useless stock, "swaps" and salesmen professing to serve as the legitimate companies.

FCB has gotten criticisms and protests concerning this scam from various investors.

 

There are two stages to this dangerous scam:

Stage One: The Pump and Dump

In a common "pump and dump" plot, an investor is drawn nearer by a business house's sales rep and offered a fantastic arrangement on a stock depicted as a rare investment.

The stock is probably going to be a US-based, over-the-counter, smaller company stock worth parts of a penny.

When an adequate number of investors have overpaid for the stock, the financier house stops to help the market for the stock and the estimation of the stock falls significantly, commonly to less than one penny for every offer.

The "financier house" instantly shuts everything down, and the casualty is left holding useless stock for which there is obviously no interest.

 

Stage Two: The Stock Swap

The investor, who is still holding the worthless stock, is drawn closer by somebody acting as a sales rep of a real sounding company. Note that the company named was not engaged with the scam. The scammer essentially utilized the name of a real company to make his sales convincing.The stock is probably going to be a US-based, over-the-counter, smaller company stock worth parts of a penny.

The sales agent told the scam victim that he spoke to a group of customers aiming to obtain stocks that had declined so as to get tax reductions. The sales agent suggested that the victim swap the useless stock for an identified blue chip stock held by the tax-burdened customers.

For the reason behind the swap, the victim's stocks would be placed at a price that the victim paid.

Since the blue chip stock was evaluated higher than the estimation of the victim's stock, the victim was required to pay the difference in the value of the stocks. In one case, the victim gave US$ 15,000.00 to a global bank where the suspect held a record. The victim did not really get the blue chip stock and instead got scammed the second time.