A Pump and Dump Scheme is a specific type of investment fraud where bad actors try to artificially induce a temporary rise in a stock’s price so they can sell at a higher profit. When the stock falls to more realistic levels, innocent investors sometimes take a serious loss.
You can take action against the people running the scam or other liable parties by working with a New York Pump and Dump lawyer at Silver Law Group. Our securities class action attorneys represent investors from all over the country who have been lured into Pump and Dump Schemes.
The financial markets and individual stock prices fluctuate based in part on information that is circulating. World events and the news impact the whole market, while reports and rumors about individual companies cause the price of specific securities to rise and fall.
Individuals and small groups of shareholders, financial advisors, and others can exploit investors’ hunger for information for their own purposes. By circulating inaccurate or misleading positive statements about a company or its prospects, they induce investors to buy and raise the price of the securities. This is the “pump.”
When the price seems to peak, the fraudsters sell their shares at an inflated profit—the “dump.” The stock price then usually settles to a more realistic level, and investors who relied on the untrue statements lose money. If a Pump and Dump Scheme defrauds many investors, our New York City attorneys can pursue a class action lawsuit to hold the cheaters accountable.
A Pump and Dump Scheme usually targets individual investors. Each investor’s losses may be relatively modest, but the losses might represent a substantial portion of that investor’s portfolio. Unfortunately, the costs and uncertainty of litigation often make an individual lawsuit untenable for an investor in this position.
However, the law recognizes this dilemma and provides a remedy. The United States securities laws allow investors to band together to hold fraudsters accountable through a class action lawsuit. Any investor who bought or sold stock while the fraud was underway can join the lawsuit.
Investors who participate in a class action lawsuit pay no upfront costs and share in the proceeds if the suit is successful. The New York attorneys at Silver Law Group handle all Pump and Dump class actions on a contingency basis. That means legal fees are only paid if they receive a favorable verdict or a settlement, and there is no fee if the lawsuit is unsuccessful.
If evidence emerges that a Pump and Dump Scheme was operating, the attorney for the first investor to file a lawsuit publishes a notice describing their claim. Others with similar claims arising from the same scam can join the original lawsuit. The defendants might be company insiders, investment advisors, or others who violated a fiduciary duty by spreading misleading statements.
The court will appoint one investor, or a small group of investors, to serve as the lead plaintiff. These investors are typically those who lost the most money in the scheme, and they take an active role in the litigation process. Any investor who believes they might qualify to be a lead plaintiff should immediately contact one of Silver Law Group’s Pump and Dump attorneys at our New York City office.
Class action lawsuits can take several years before reaching a resolution. If the lawsuit is successful, the proceeds of the verdict or settlement are distributed to the participating investors on a pro rata basis according to the sum they lost due to the scheme.
Losing money in a scam can be devastating, and feeling victimized without recourse only makes the experience more painful. A New York Pump and Dump scheme lawyer at Silver Law Group represents investors from all backgrounds from across the U.S. Contact us today if you believe you need to take legal action.
