Stock promoter

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A stock promoter is someone who promotes a stock, either to sell it as part of an IPO, or to persuade others to purchase in the secondary market so that its price goes up. This is often done as part of a market manipulation scheme known as pump and dump where the price is artificially driven higher so that promotor can sell their own shares at a profit. This is considered securities fraud and illegal in most jurisdictions.

Stock promoters first relied on cold calling prospective investors to acquire stock in a company, and then later moved on to using the Internet, which provides for a much more efficient method of promoting a stock to a wider audience.

Usually, stock promoters promote penny stocks because of the difficulty in finding information on these companies as they are normally listed on the OTC Bulletin Board or Pink Sheets, which do not require that companies provide as much financial information as other exchanges, such as the NYSE.[1][2]

References[edit]

  1. ^ Mufson, Stephen (1998-10-29). "SEC Accuses 44 Online Stock Promoters of Fraud". The Washington Post. 
  2. ^ Hanley, Robert (2003-08-09). "Maze yields $46 million Penny-stock promoter's assets traced". International Herald Tribune.