Pump and Dump is a phrase that often refers to one of the traditional business practices used to manipulate markets and bilk investors.
- Fraudsters buy shares in the target company, usually one that's little known.
- Fraudsters put out false information pretending the target company is worth more than it is.
- The share price goes up if investors believe the lies about the target company.
- Fraudsters sell their shares in the target company for more than the shares are really worth. Then the share price goes down.
- Ordinary investors are left with something worth less than what they paid.