Pump and dump schemes have two parts. In the first, promoters try to boost the price of a stock with false or misleading statements about the company. Once the stock price has been pumped up, fraudsters move on to the second part, where they seek to profit by selling their own holdings of the stock, dumping shares into the market.

These schemes often occur on the internet where it is common to see messages urging readers to buy a stock quickly. Often, the promoters will claim to have inside information about a development that will be positive for the stock. After these fraudsters dump their shares and stop hyping the stock, the price typically falls, and investors lose their money.

In West Virginia, as in other states, 'pump and dump' schemes are considered a form of securities fraud and are illegal under both state and federal law. These schemes violate the West Virginia Uniform Securities Act, which prohibits fraudulent and deceptive practices in the sale of securities. Additionally, federal laws enforced by the Securities and Exchange Commission (SEC), such as the Securities Act of 1933 and the Securities Exchange Act of 1934, also prohibit such schemes. The SEC can take enforcement action against individuals and companies who engage in pump and dump schemes, including fines, injunctions, and criminal charges. Investors in West Virginia who believe they have been victims of a pump and dump scheme can report the activity to the West Virginia Securities Commission or the SEC. Attorneys with expertise in securities law can provide guidance and representation to those affected by such fraudulent activities.