Pump and dump stocks are normally penny stocks, OTCBB stocks, but really any low liquidity stock can be used. This is why I do not purchase low liquidity stocks and undoubtedly never pink sheet stocks. Those of you long time readers that are familiar with me on a more individual level know that I was scammed out of about $10,000 in just such a pump and dump stocks scam in a company called Plasticon that traded on the pink sheets. It's a extremely hazardous world out there folks and you ought to be knowledgeable and ready for the time when a scammer comes knocking at your door. I was studying new SEC litigation and one such pump and dump stocks swindle gave me terrifying flashbacks from the scam I was a victim of. On July 9, 2010, the Securities and Exchange Commission filed a civil action against a Huntington Beach-based penny stock advertiser, Songkram Roy Sahachaisere, and his company, InvestSource, Inc. for committing fraud while promoting stock of their clients through very big email campaigns. In its complaint filed in the United States District Court for the Central District of California, the SEC alleges that Sahachaisere, age 40, and InvestSource supply "investor relations services" by hyping several penny stocks in its daily email newsletter, called the "Daily Digest," and by posting business profiles on its website. From January 2008 to March 2009, defendants sent nearly 450 emails publicizing these penny stocks to over 24 million recipients, receiving clients' stock as compensation. There's a decent likelihood you received one of their penny stock spam email messages. The complaint centers on seven identifiable penny stocks that InvestSource touted in which, the SEC says, defendants made misleading statements concerning the nature of their payment on InvestSource's website and in the promotional emails. The defendants also failed to divulge that they were selling the very penny stocks they were recommending investors buy. According to the complaint, between April 2008 and March 2009, defendants dumped over 5 million shares of these seven penny stocks through one or more of their roughly 36 brokerage accounts, criminally reaping profits of at least $276,000. InvestSource varied the layout of its Daily Digest, varying the number of penny stocks promoted or the type of information presented, such as a company profile, press release, or alerts about the price or volume of stock trading. InvestSource's theme, however, did not change: it described its clients and their business forecast in positive terms and overtly or implicitly recommended that stock traders buy the stocks of the featured companies. InvestSource's promotions normally correlated with increases in securities' trading volume. For instance, five of the seven penny stocks at issue in this action (China Forestry, Inc., FIMA, Inc., Heart Health, Inc., New Asia Gold Corp., and Praebius Communications, Inc.) had big increases in trading volume during InvestSource's pumping. Its hyping of PureSpectrum, Inc. was associated with a enormous increase in price, from $0.14 to $0.42 per share, with a high of $0.77 per share during the promotion. InvestSource and Sahachaisere did not make known the payment received or their securities trading in any of InvestSource's email newsletters. Rather, each email included the word "disclaimer" and a link to InvestSource's website. The link took investors to InvestSource's "main disclaimer" website page, which stated in relevant part: "The companies listed on the 'Featured Companies' section of our website MAY have compensated the Company [InvestSource] to be profiled on this website." This "main disclaimer" was materially false and disingenuous because it stated that: InvestSource "may" have been compensated for its services when, in fact, InvestSource or its principal, Sahachaisere, was always compensated. The "main disclaimer" website page continued, "Such compensation has been or will be made in cash and or issuance of securities of the profiled company. The specific compensation type and amounts that the company has been paid from each respective company is set forth on the transcript box accessible from each respective company page within our site. We may liquidate any securities that we receive as compensation when deemed appropriate to do so, however, we attempt to liquidate such securities upon receipt thereof PRIOR to performing any services for such company." The SEC argues that this main disclaimer was significantly false and misleading because it stated that InvestSource attempted to liquidate securities it received as compensation for its services upon receipt thereof "PRIOR" to performing any services, when, in fact, Defendants sold the penny stocks after several pumps recommending their purchase, and profited thereby; and the statement that InvestSource planned to sell securities before promoting them was substantially false because its practice was to sell securities while promoting them.