The frenzied growth of investing via the Internet has spawned a more virulent kind of stock manipulation where, in a matter of minutes someone can drive up a stock price, reap the profits and run. The SEC's recent complaint against Douglas Colt highlights an old scam called pump and dump.
1 Finding a stock
The perpetrator searches for a vulnerable stock that is thinly traded, little known and cheap. Among Colt's picks was American Education Corp., trading at around $1 a share.
2 Buying cheap
On March 5, 1999, Colt started buying the stock at 10:47 a.m. and continued until 2:19...