Raiser & Kenniff, PC, is a criminal defense law firm founded by two former prosecutors who handle virtually every type of white collar crime. Pump and dump schemes, are one of the most popular forms of white collar crimes prosecuted by federal authorities. With the rise of the internet, pump and dump market manipulation has drastically increased, and as a result authorities are conducting more and more investigations into suspected schemes. If you’ve been charged with pump and dump market manipulation, you could be accused of violating securities laws which leads to immense financial fines. In addition, if you’re charged with market manipulation, it’s possible you may be investigated by federal authorities and face jail time. At Raiser & Kenniff, PC, our NYC criminal attorneys can protect your rights and preserve your future.
Pump and dump is a form of stock fraud which typically involves microcap companies. These are companies with a market capitalization of under of $250 million. They are often called penny stocks, because they are trade at levels below $1. Fraud typically occurs when someone is manipulating the stock price by spreading false, or misleading info, resulting in the share price increasing. The person conducting the scheme sells his shares at a profit. The people behind the scheme pump the value of the stocks, and then sell their stock. They stop promoting the stock, which results in the stock price plummeting. Pump and dump schemes are easily accomplished due to the fact penny stocks are traded OTC rather than major markets. The OTCBB has less regulations and is easier to manipulate.
With telemarketing and internet becoming popular, it’s become easier to disseminate false information. If you’re accused, we encourage you to contact our lawyers. We have extensive experience handling federal investigations, and can help build a credible defense and weaken the opposing prosecutions case.
Laws surrounding pump and dump schemes
There are a number of laws that forbid pump and dump:
Securities act of 1933: It prohibits anyone from selling or offering securities as a part of a scheme to defraud. It makes it a criminal act to make material misstatements, omitting material facts, or participating in schemes that defraud purchasers.
Securities Exchange Act of 1934: Prohibits fraud, material misstatements in the sale of purchase of securities
US Code Section 1343: Wire fraud criminalizes any scheme which uses any form of communication.
US Code Section 1341: The statute prohibits fraud and swindles, which use the postal service. If you sent false statements about a company using the mail, then you could be charged with postal fraud.
These are just a few of the laws which could impact you if you’re being investigated for pump and dump schemes.