“Pump-and-dump” scams occur when brokers hype up the potential of a (usually cheaply priced) listed firm to inflate the value of stock before selling their outsized shares.
This scam existed before the age of social media or even the internet itself. But in an era when people spend a good part of their time on social platforms, unscrupulous brokers have a new outlet for furthering these schemes.
If someone – even a licensed broker or financial advisor – contacts you through social media about buying stock, it’s a good idea to be suspicious. Leave advice about investing to advisors who you know are working for you.
