penny stock fraud

penny stock fraud definition - finance
Fraud that is committed by speculators in penny stocks, which are the stocks of very small companies with a limited number of shareholders. The insiders purchase the shares and put out false rumors about the companyÂ’s prospects; then when buyers emerge, they sell their shares and make a huge profit. The new investors are left with virtually worthless shares.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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