Posts Tagged ‘scams’

Money Laundering is…

Tuesday, October 20th, 2009

Money laundering is when someone passes illegally received money through banks, businesses, or other institutions so that it appears to have been acquired legally. You launder dirty money to make it appear clean.

A Pump and Dump is…

Thursday, August 20th, 2009

A “pump and dump” is an investing scam in which con artists use false or misleading statements to get investors to buy up a lot of a particular stock that the scammers also own. If a lot of people buy the stock, the price of the stock generally goes up. The con artists can then sell theirs at an inflated price, after which the stock price usually falls again, causing the other investors to lose their money.

A Boiler Room is…

Thursday, August 20th, 2009

A boiler room is a bank of telephones, usually set up by a broker, from which salespeople make calls to potential investors and pressure them to buy stocks. This is generally considered an unethical practice.

A Ponzi Scheme is…

Friday, May 15th, 2009

A Ponzi scheme (named after Charles Ponzi) is an investment scam that promises investors high returns that aren’t actually real profits. Instead, each time a new investor signs on with the money manager, he uses their new funds to pay the high ‘returns’ to his older clients. Ponzi schemes fall apart because the manager eventually will fail to find new clients or regulators catch on – it’s generally just a matter of when.