Despite the long history of fraud, many investors are drawn to penny stocks. A penny stock is a stock that trades for below $5, and their allure comes from the power to purchase more shares with less money.
But the dream of owning the next big thing has driven many investors into the hands of penny stock scammers. The majority of penny stock scams are “pump and dump” cases. A pump and dump is the illegal act of promoting stocks you own with false and misleading statements to sell when the stock price inflates.
1. Jordan Belfort
Jordan Belfort is a convicted felon who pled guilty to stock manipulations in 1999. Through his brokerage company Straton Oaks, he peddled misleading information about stocks he owed.
These misleading statements inflated the…