If you’re reading this, it’s likely that penny stocks are something you’ve considered investing in. You might have seen a few posts on your Facebook wall from people who say they turned money into more money and made thousands overnight – but the risks are there!
Penny stocks are often the target of scams. Penny stock brokers will take advantage of inexperienced investors and show them how to get free stocks in companies with little-to-no chance for success, but they promise these bogus investments will make money that can’t be lost.
Short and distort is the mirror image of pump and dump. It works by shorting the stock on Robinhood or a Robinhood alternative (usually in a bull market) and then releasing false information to send the price plummeting.
The scammers buy shares of this doomed-to-fail private company and then take it public by merging with another already successful publicly traded entity through an exchange offer they have created – typically for millions of dollars more than what they purchased the stock for!