SIE practice questionmediumPump and Dump
An individual purchases shares of a penny stock, then spreads false positive information about the company on social media to drive up the price before selling. This scheme is known as:
- ACornering the market
- BShort and distort
- CBear raid
- DPump and dump✓ Correct answer
Explanation
Why D — Pump and dump
A pump-and-dump scheme involves artificially inflating the price of a stock through false or misleading statements, then selling shares at the inflated price. This is securities fraud. A short-and-distort scheme is the opposite: shorting first, then spreading negative information.
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