Anatomy of a Real Pump and Dump

www.investing-performance.com www.reverse-merger.info

Anatomy of a Real Pump and Dump


Disclaimer:This is not investment advice of any

kind.You are on your own.

These types of stocks are VERY risky. You could easily lose all your money.


This data is from an actual SEC complaint

alleging a $33 million manipulation of eight small US

companies.


Micro-cap companies are easier to manipulate because they have

smaller public float.


The defendants merged Chinese companies into US public shell companies in reverse mergers.

The companies changed name and conducted a reverse split

www.investing-performance.comwww.reverse-merger.info

Large blocks of unrestricted shares were issued at little or no cost

to nominees, whose names were being used to disguise

the defendants’ ownership.

http://www.investing-performance.com/


This enabled the defendants to control the entire float

of the issuer’s stock.


At first, there was little or no trading volume in the stock,

which often traded at prices below $1.


The defendants, corporate insiders, or others at their direction, opened brokerage accounts in the names of

straw parties or nominees and deposited the public companies’ stock.


Next, the defendants coordinated the launch of spam e-mail campaigns touting these

low-priced stocks.


These spam attacks corresponded with press release campaigns

purporting to announce positive, newsworthy events that hyped the

public companies’ business.


The spam e-mails contained false and misleading information and baseless

price projections. Some of the e-mails contained false and

misleading language concerning purported acquisitions.


These spam e-mails were intended to pump or increase the prices of the

securities and/or create demand for the securities.

These campaigns often created a short- term spike in volume and price.


Along with, or shortly after, the spam e-mail campaigns,

the defendants sold all the stock in these public companies.


Under instructions from the defendants, the corporate insiders, or others

working on their behalf, one of the defendants immediately wired out the

entire proceeds of those sales to foreign bank accounts in the name of

those nominees.


The proceeds were used to pay the defendants and the spammers.

In some instances, part of the proceeds was also sent back to the issuer or

corporate insiders, who had concealed their beneficial ownership and trading in their respective issuer’s securities.


We now look at one of these stocks.


To start, the company issued 30,000,000 shares of Stock

to a consultant for “business restructuring services.”


This increased the outstanding common stock to

31,162,902, and the 30 million shares

were 96% of the outstanding common stock.


Using an invalid SEC filing for 6,000,000 shares,

the defendants were to sell5,780,000 shares

in the pump and dump.


The stock was re-listed on the

Over- the-Counter Bulletin Board.


The company filed a 10-Q with the SEC

showing $53 in cash and a negative net worth

of $10,000.


A spam e-mail campaign was coordinated

with a press release campaign.


The spam emails falsely said that the company was to acquire a $75 million project, that it was in partnership with

a multimillion dollar developer, a potential agreement with a brake

manufacturer, and had the prospect of build an auto exhibition center.


The spam e-mail often predicted the news in the press releases

(“get on XXX before the news hits. . .”).

The company coordinated 13 press releases with the spam e-mail.


For 90 days before the spam, the stock traded sporadically at prices from

$0.00013 to $0.22, volume ranging from zero to 47,166 shares.

Most of the trading volume was by the defendants to create the appearance of

trading activity in the stock.


In the two weeks leading up to the spam e-mail,

the stock only traded 12,200 shares on two trading days at $0.11 to $0.12.


Here is the chart


There were three stages in the trading.


First, up until the spam campaign starts, the defendants created some trading in the market that pushed the stock from virtually nothing to twenty cents on

light volume. The stock trades as high as 30 cents,

volume 13,524.


As the spam campaign starts, the stock spikes to 69 cents,

volume is 2,099,473.As the spam continues, volume is over

5,000,000 shares and the price closes at $0.20.


Here is the chart


Assuming that most of the sell

volume was from the defendants, their take during this week was

probably over $1 million.


After the spam ends, the stock still trades

at about ten cents per share, hundreds of thousands of shares

per day.


By the next year,the price is down to three cents

and the volume is only tens of thousands of shares

per day.


This follows the pattern I describe in my books:

accumulation, markup

and distribution.


The stock was accumulated by the insiders at low prices when they

watered the stock and in their early purchases in the market.

When the spam started the stock was marked up and then distributed.


What caused the great spike and the great public enthusiasm

for this stock? Seeing the great “news” speculators

buy hoping that there is a “greater fool” to take them out

at higher prices.


Some of these buyers are day traders

who do not care how high the stock is; they only care

that the stock goes higher.


The stock rose to a market value of some $15 million or more at its peak when in actual fact the company only had a minimal or negative net worth,

minimal or no revenues, and little or no cash.


Anyone paying up for the stock was gambling on the future. In most of the these stocks,

this future rarely materializes.


Buy stocks that are selling below their true value,

as I describe in my book “How to Find a Home Run Stock.”


For more on stock trading, go to my website,

www.investing-performance.com

and

http://www.investing-performance.com/


Buy my book “How to Find

Home Run Stock”

on Amazon.com


Subscribe here on YouTube for more free videos and let me know what else you would like to see.

Anatomy of a Real Pump and Dump

Documents

public companies stock

public companies business

chinese companies

spam emails

us public shell companies

spam attacks

issuers stock

corporate insiders