‘Pump and Dump’ In Finance?

Pump and Dump refers to a form of financial manipulation where investors in a stock, or any other financial security, try to temporarily increase its price in order to sell their holdings at a favourable price. Stock manipulators usually bring about a sharp spike in the price of the targeted stock by spreading exaggerated news that is favourable to the stock. It is commonly directed at small and mid-cap stocks which have low liquidity, so it can be influenced more easily by manipulators.

pump & dump in finance

Even large-cap stocks, however, can be manipulated temporarily by bigger investors wanting to make a quick buck. Pump and dump schemes have been outlawed in markets across the world.

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