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Suppose I regularly profit from other people's pump and dump scams (assume that this is possible). I don't organize these scams (they are illegal); I merely hop on and hop off at the right times (assume that this is possible). If I am regularly profiting from pump and dump scams, will I get investigated by the SEC for market manipulation? Is there a chance of going to jail? I understand that buying into a pump and dump may be considered unethical even if not illegal, but here I'm asking about regulations rather than morals.

(I don't intend to buy into a pump and dump. I am just curious about the regulations.)

Flux
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The SEC has quite a few researchers and data scientists who have implemented models to screen for suspicious behavior. If anyone regularly profits, say, on a much higher percentage of trades than usual, then they will be flagged. It won't matter if it's a retail trader or an institutional trader. Many people go to extreme lengths to disguise the thread that connects them to an inside information source:

https://money.cnn.com/2014/09/19/news/companies/post-it-note-insider-trader/index.html

However, if you are unwittingly profiting and flagged, the onus is on the SEC to build a case against you. Many cases are dropped due to lack of evidence, or having exceeded the time allowed for disgorgement. Of course, if you are not unwittingly profiting, then the SEC, in conjunction with the DOJ, can launch an investigation, and will most likely be able to find any record that links back to the pump and dump scheme. Even if you eat the evidence, like the guy did in the article.

eraserman
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