Consob warning: “pump & dump” scams on social media

Consob warning: “pump & dump” scams on social media

The Authority alerts investors to fraud schemes manipulating prices through apps and informal channels.

On October 28, 2025, Consob issued a press release titled “Beware of the ‘pump & dump’! – New Consob Warning on the Risks of Scams that Manipulate Prices on Financial Markets”, warning investors about the spread of fraudulent schemes that use informal channels (social networks, messaging apps) to promote investments that may appear promising but actually conceal manipulative practices.

The Consob Statement of October 28, 2025

Consob reported receiving numerous complaints from investors who were lured by “investment tips” shared through messaging apps or social networks—such as WhatsApp or Telegram groups, or Instagram and Facebook channels—and who subsequently suffered significant losses.

In particular, the Authority noted that behind profiles posing as financial analysts, investment professionals, or even “Consob representatives,” there are individuals promoting the purchase of low-cost shares (“penny stocks”), often listed on the U.S. market (especially the NASDAQ Composite), or of little-known Chinese or foreign companies, promising exceptional profits in a short period of time.

The press release highlights that:

• The scheme’s promoter already holds a significant share of the stock.
• Coordinated purchases are organized, often requiring investors to provide “proof” (such as a screenshot of the transaction) to join the buying group.
• After the artificial price increase (the “pump” phase), the promoters sell their shares (the “dump” phase), causing the stock to crash and leaving other investors with heavy losses.
• Such schemes may also involve crypto assets, not just stocks.
• Several “red flags” are listed, including unsolicited messages or emails, invitations to join investment groups, promises of quick and high returns, pressure to act immediately, and requests for screenshots or personal data.
• Consob reminds that if the securities involved are not listed on EU markets, certain investor protections under EU law are missing, and market abuse regulations may not fully apply.
• It stresses that those spreading false or misleading information can face administrative or criminal penalties, in Italy and abroad.

In summary, Consob urges investors to exercise maximum caution toward information coming from informal sources, especially when “extraordinary” returns are promised without a proper explanation of the associated risks.

The “Pump & Dump” Scheme

The term “pump & dump” literally means “inflate and unload” and describes a type of fraud that typically unfolds in three stages:

1. Accumulation: Promoters buy a large amount of an illiquid or little-known stock, often a penny stock.
2. Pump (inflation): Through promotional messages—newsletters, social media, messaging—they persuade others to buy the stock, generating artificial demand and pushing up the price and trading volume.
3. Dump (unloading): Once the price is high enough, promoters sell their shares for profit. The stock price then collapses, and other investors are left holding illiquid shares at a loss.

Consob describes it precisely:

“Once users—convinced of the possibility of obtaining large profits in a short time—begin to purchase the shares, the scammers ask them to send screenshots… In this way, purchase orders are coordinated, artificially pushing up the price of the stock (pump). When the value reaches a high level, the promoters… sell their shares en masse, making a hefty profit; at the same time, however, they trigger a sudden collapse in price (dump), leaving other investors with heavy losses.”

Key points:

• “Penny stocks” (low-cap shares, often traded on OTC or less regulated markets) are the preferred targets.
• Today, digital tools, social media, and messaging apps make it easier to spread these promotions widely, amplifying the phenomenon.
• Regulators like Consob warn that when securities are not subject to EU market abuse rules, investors face even higher risks.

Why It’s Dangerous

• Late participants in the “pump” phase buy at inflated prices.
• When the “dump” happens, the real market recognizes the lack of substance, and prices crash.
• Promoters usually sell early and ignore the losses of others.
• Investors are drawn in by promises of easy money and underestimate the risk.
• Some jurisdictions offer little transparency and weak investor protection.

Past Enforcement Actions – International Examples

Consob is not alone in tackling these phenomena. Here are a few notable cases pursued by the U.S. SEC and other regulators:

• 2014: The SEC charged three penny-stock promoters—Anthony Thompson, Jay Fung, and Eric Van Nguyen—who bought shares of micro-cap companies, promoted them through newsletters, and sold their holdings after artificially inflating prices. The SEC noted they failed to disclose that they were selling while encouraging others to buy.
• March 2022: The SEC filed charges against five individuals operating a call center in Colombia that used high-pressure tactics and false claims to convince retail investors to buy low-cap U.S. stocks.
• April 2022: The SEC charged 16 individuals and entities based in the Bahamas, BVI, Bulgaria, Canada, and elsewhere for participating in a penny-stock fraud scheme that generated more than $194 million in illicit proceeds.
• September 2025: The SEC announced the creation of a Cross-Border Task Force to strengthen enforcement against fraud involving foreign companies, including pump & dump schemes.

These cases show that regulators around the world closely monitor such manipulative schemes and can impose sanctions, seize assets, issue restraining orders, and even pursue criminal or civil proceedings.

How Investors Can Protect Themselves

Based on Consob’s warning and international precedents, here are some best practices to avoid falling victim to pump & dump scams:

1. Be skeptical of promises of quick, easy profits. If someone says “you’ll make a lot of money fast,” it’s a red flag.
2. Verify the source. Is the investment advice coming from an authorized entity? Consob recommends checking the “Beware of Scams!” section on its website.
3. Be wary of informal channels. Unsolicited WhatsApp or Telegram messages, social media groups, and requests for screenshots are major warning signs.
4. Avoid illiquid, opaque securities. Penny stocks, little-known foreign companies, and unregulated markets are high-risk targets.
5. Don’t invest just because “everyone says it’s going up.” A rising price doesn’t necessarily reflect real value.
6. Diversify and understand risks. Even legitimate investments involve uncertainty—no profit is guaranteed.
7. Report suspicious behavior. If you receive unsolicited investment offers or notice irregularities, report them to the proper authorities.

The Role of 4ftInvest

4ftInvest operates with a transparent approach, avoiding promises of easy or miraculous profits. Instead, it provides advanced technological tools for risk management and market analysis.
In an environment filled with misleading promises and manipulative schemes, choosing an operator that clearly explains risks, demonstrates its methods, maintains transparency about results, and avoids creating unrealistic expectations is essential for responsible investing.

In Summary

Consob’s October 28, 2025 communication is a strong reminder to be cautious toward investment proposals shared via informal channels—especially those offering rapid returns. The pump & dump scheme is a well-established form of fraud that has been repeatedly sanctioned by regulators worldwide. For investors, education, source verification, and disciplined behavior are the best defenses.
In this landscape, companies like 4ftInvest, which commit to transparency and the use of advanced risk management technologies, can offer one of the most reliable ways to operate more safely—while always recognizing that investment risk can never be completely eliminated.