Penny Stock Scams

[Jolly]

Penny stock scams often lure investors with the promise of high returns on low-priced stocks, typically trading below $5 per share. Scammers use tactics like "pump and dump," where they artificially inflate the stock's price through false or misleading statements, only to sell their shares at the peak before the price collapses, leaving unsuspecting investors with worthless stock. For instance, the case of Sure Trace Security Corporation in the early 2000s saw promoters falsely claim significant contracts and technological breakthroughs. Another example is the 2014 scam involving Cynk Technology Corp., whose stock price skyrocketed from pennies to over $21 per share on the back of fabricated claims, before plummeting once the fraud was exposed.