Pump-and-dump schemes
A pump-and-dump scheme is a coordinated manipulation tactic where promoters artificially inflate a stock's price (the "pump"), then sell their shares (the "dump"), leaving retail investors with losses.
Red Flags to Watch
- Unsolicited investment tips via email, social media, or group chats
- Promises of guaranteed returns or insider information
- Sudden and unexplained price spikes with high volume
- Limited publicly available information about the company
- Shares trading on penny stock exchanges or OTC markets
- Aggressive marketing on Telegram, Discord, or Reddit groups
Penny stock scams
Penny stocks—shares trading below $5—are common targets for manipulation due to low trading volumes and limited regulatory oversight. Scammers exploit these characteristics to artificially move prices.
Why Penny Stocks Are Vulnerable
- Low market capitalization makes prices easier to manipulate
- Limited shares outstanding can lead to large price movements
- Minimal trading liquidity means fewer buyers/sellers
- Reduced SEC oversight compared to larger companies
- Limited financial reporting requirements
Cold calling and social engineering
Scammers use high-pressure sales tactics and false credentials to build trust and convince investors to buy fraudulent securities. These attacks often combine social engineering with false claims.
Typical Tactics:
- Fake financial advisor credentials and broker licenses
- Manufactured urgency ('Act now, this offer expires tonight')
- Social proof claims ('Others have already made 300% returns')
- Fake testimonials and fabricated success stories
How ScamDunk can help
ScamDunk uses advanced data analysis to identify stocks showing pump-and-dump characteristics, unusual volume patterns, and market manipulation signals.
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