Scams, Fraud & Red Flags

How market fraud works and how to protect yourself.

1. Insider Trading — Illegal insider trading means trading on important secret information in breach of a duty to keep it confidential. Here is what counts, what does not, famous cases and the rules for company insiders and members of Congress.
2. Pump-and-Dump Schemes — In a pump-and-dump, fraudsters hype a thinly traded stock, then sell their shares to the buyers they attracted. Here is how the scheme works, why small stocks are targets and how modern versions use group chats.
3. Ponzi Schemes — A Ponzi scheme pays earlier investors with money from new investors, not real profits. Here is how the scheme works, why it always collapses and the record-setting case of Bernie Madoff.
4. Spoofing & Manipulation — Market manipulation means creating false impressions of supply, demand or price. Here is how spoofing, layering and wash trading work, the traders and banks penalized for them and how regulators catch manipulation.
5. Fake Gurus & Social Media Hype — Investment scams now spread through social media, messaging apps and fake ads featuring famous faces. Here is how big the problem is, the most common tricks and how to judge online investing advice.
6. Your Red-Flag Checklist — Most investment scams share the same warning signs. Here is a checklist to run before investing, the free tools for checking brokers and advisers and where to report fraud.