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23 U.C. Davis Bus. L.J. 1 (2023)

handle is hein.journals/ucdbulj23 and id is 1 raw text is: STOCK MARKETS PLAY 'WHACK A MOLE' WITH PUMP AND DUMP SCHEMES JANET AUSTIN* ABSTRACT The surge, and then fall, of the price of shares in GameStop Corporation in early 2021 generated renewed attention to pump and dump' stock market manipulation schemes. In a practice known for centuries, the perpetrators of pump and dump schemes profit by artificially inflating the price of a security and then selling it before the security returns to a price which more closely reflects its underlying value. In the GameStop saga, unlike other types offraud, investors caught by the scheme appear to have garnered little sympathy from the public. It seems that this is because investors who purchase shares subject to pump and dump schemes frequently make purchasing decisions based on rumors or perhaps hope to ride the wave of the pump' and thereby 'get rich quick'. Yet, regardless of one 's view on the blamelessness or otherwise ofinvestors in such schemes, a renewed focus by regulators and stock markets on pump and dump' schemes is necessary. Pump and dump schemes continue to be a scourge on stock markets around the world, and particularly on small cap markets which cater for listings of small to medium enterprises. The prolferation of pump and dump schemes in those markets impacts market integrity by discouraging investment and listings. Less investment in such enterprises can adversely impact both job creation and economic growth. This article examines the problem of pump and dump schemes and the detrimental impact they have on the integrity of small cap markets. It then considers the challenges in eliminating pump and dump schemes from these markets before considering ways to stop such schemes and thereby enhance market integrity. * Dr. Janet Austin is a Professor at the Faculty of Law, University of New Brunswick (UNB), Canada. Prior to joining UNB, Dr. Austin taught at the University of New South Wales, Sydney, Australia and spent many years as a senior prosecutor at Australia's federal prosecution service, the Commonwealth Director of Public Prosecutions, where she conducted significant prosecutions for white-collar crime. Dr. Austin's expertise is in relation to issues surrounding the investigation and enforcement of offences that cross international jurisdictions. She has published many articles in these areas and is the author of Insider Trading and Market Manipulation: Investigating and Prosecuting across Borders, (Edward Elgar Publishing, UK, 2017) and a co-editor of Corporate Whistleblowing Regulation, Theory, Practice and Design (Springer Inc., 2020).

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