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Forums :: Penny Stock Forum :: Sources of Penny Stocks Scams

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JohnWilson
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Posts: 1

 Sources of Penny Stocks Scams
Posted on: 07/26/2010 04:57 AM
Penny stocks persistently become the victim of dishonest pump and dump schemes. Some fraud companies adopt these schemes to make money from you. By this scheme, they give false or misleading statements to upsurge stocks. This is called "dumping" on the public at overstated prices. These schemes are carried out by telemarketing and Internet fraud. There are other such plans whose sole purpose is to deceive people. There is also chop stocks scheme, where stocks are bought for pennies and sold for dollars to abroad or domestic retail investors. By this both brokers and stock promoters get huge profits.

The brokers usually get their payment "under the table" secret payoffs to sell such stocks. The focus stocks as a rule have low or no liquidity earlier to the block purchase. After the block is bought, the firm's sharing brokers will sell the stock to their brokerage customers at the then-current quoted ask price. These are bought by often victimized investors who are generally unaware of this practice.
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