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 Wyoming, as in all states, pump and dump schemes are considered a form of securities fraud and are illegal under both federal and state laws. The Securities and Exchange Commission (SEC) at the federal level enforces laws against market manipulation, including pump and dump schemes. These schemes violate the Securities Act of 1933 and the Securities Exchange Act of 1934, which prohibit fraudulent activities and misrepresentations in the trading of securities. Additionally, Wyoming state law, under the Wyoming Uniform Securities Act, prohibits fraudulent and deceptive practices in connection with the offer, sale, or purchase of securities. Violators of these laws may face both civil and criminal penalties, including fines and imprisonment. Victims of pump and dump schemes may also have the right to bring a private action to recover losses. It is advisable for individuals to consult with an attorney if they believe they have been the victim of a pump and dump scheme or if they require guidance on these matters.