Where there is money to be made, you can be sure an Internet scammer/spammer will be there. Wall Street is no exception. In the latest pump and dump rendition, scammers acquire a large quantity of an inactive, inexpensive, “bioceutical” penny stock; in this case, 417,00 shares at $0.19 per share, spending $79,230. Then the email campaign starts, suggesting that the stock “RCHA” is on the move and now is the time to buy. Well-known investor and news outlet logos are added to the emails to suggest legitimacy.
As unsuspecting (and likely undereducated) investors fall for the scheme and purchase the penny stock, the stock price rises. If we assume that the scammers sell at $0.34, then they’ve made a profit of approximately $63,000, although they may have acquired and sold additional stock along the way. That’s almost an 80% return on the initial investment. As Gorden Gekko might say “Not bad for a City College boy”.
For those of you familiar with Leonardo DiCaprio’s latest Academy Award-nominated film, The Wolf of Wall Street, you’ll be amused at this pump and dump schemers choice of pseudonym’s “Oakmont Stratton”. (Prosecuted in the 1990s for stock and investment fraud, the real owners of the firm Stratton Oakmont eventually pleaded guilty to 10 counts of securities fraud and money laundering.)