Financial Markets Book Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
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by Robert Hashemian

Page 250

bodies, chiefly the Securities and Exchange Commission (SEC), which is responsible for the entire stocks activity in the US. Other countries with organized stock markets have their own versions of the SEC. The regulatory organizations carry out many functions to control and monitor the stock markets, but ultimately their job is to police the stocks activity to promote a fair and organized trading of stocks. Without their supervision, the stock markets could turn chaotic and no one would have enough confidence to invest.

Every single activity in the stock markets is monitored by the watchful eyes of these regulatory bodies, and it is this diligent monitoring that can catch those involved in illegal deals. Irregular trading activities are normally investigated to a conclusive end, and if an illegal act is determined, those involved could expect to be charged and punished by the law. It's the only way to be sure that investing in stocks continues to be fair and free of illegal elements.

From illegal insider trading to false earnings reports to scams, the stock market sees a good share of criminal activity. This is no wonder. Considering the large amounts of money involved it would be foolish not to believe that criminal elements would be attracted to stocks. With plenty of investors willing to risk their hard-earned money in the hopes of big returns, the market is ripe for scammers. Two well known scams are "pump and dump" and "bait and switch." These are by no means new scams nor are they only limited to the stock market, but they have tricked many investors into investing in shoddy stocks where they are almost sure to lose their investments.

The pump and dump scam works by attracting investors to a worthless stock through any possible means. From regular mail to phone calls to Web sites to e-mails, investors are bombarded with false statements about the stock. The message maybe about some phony


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  • Book Chapters
    Table of Contents Copyright and Disclaimer Foreword Money
    Bonds Futures Stocks Options
    Mutual Funds Retirement Final Words Appendix A

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