U.S. flag

An official website of the United States government

Dot gov

Official websites use .gov
A .gov website belongs to an official government organization in the United States.

Https

Secure .gov websites use HTTPS
A lock () or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

Ramp and Dump

The FDIC OIG is warning investors and the public about a type of investment fraud scheme known as “Ramp and Dump.” 

How It Works:

In a “Ramp and Dump” scheme (which is a type of Pump and Dump scheme), Chinese or other micro/small-cap non-U.S. companies, typically valued at $15 million or less, with an individual share price of $4-6 at the Initial Public Offering (IPO) will obtain a listing on the NASDAQ and go public, while the bad actors are allocated millions of pre-IPO shares at little to no cost to themselves.

Leading up to an IPO event, bad actors will solicit investors through WhatsApp group chats by making false claims about the value and instructing the victims to purchase shares on the day of an IPO at a specific time. 

The bad actors will then sell the shares they possessed pre-IPO at an inflated value. These “match trades” allow bad actors to sell the shares they were allocated at pre-IPO, resulting in 100 percent profit. 

Another method of this scheme involves imbedding malware onto a victim’s computer. The malware will allow the bad actor to remotely access the victim’s computer. Once access is enabled, the bad actor can obtain passwords, multi-factor authentication, and usernames to the victim’s accounts and utilize a victim’s brokerage account to purchase small cap stocks, while there are match sales from accounts controlled by the bad actors.

They utilize stock transfer/clearing agents that have a low threshold for compliance and Know Your Customer, and conduct minimal trade surveillance, thus allowing wash trades, and activity indicative of a ramp and dump scheme.

Red Flags:

  • Posts on social media indicating a small-cap Chinese or other micro/small-cap non-U.S. companies as a great investment opportunity.
  • Unsolicited contact or messages from a stranger on WhatsApp or another encrypted messaging platform.
  • Unsolicited emails purportedly from your financial institution with a link or request for personal information such as your social security number or account number. 

Protect Yourself:

  • Ignore and block unwanted solicitations and/or messages from unknown parties.
  • Do not click any links or send personally identifiable information to an email purporting to be from your bank unless you were expecting correspondence for other reasons (for example, taking out a loan or applying for a mortgage).
  • If you receive an unexpected message purporting to be from your bank, contact your financial institution, using the number on the bank’s official website, and law enforcement.
  • If you are seeking investments, conduct searches of any company conducting an IPO on the Securities and Exchange Commission’s website, and conduct a search on the Financial Industry Regulatory Authority’s (FINRA) broker check for any of the parties involved, which could yield disclosures/risks that an investor is unwilling to take. 

If you suspect that you have been a victim of a Ramp and Dump scheme, contact the FDIC OIG Hotline.

Additional Resources:

Recent Case Examples:

Reminders for Banks

  • Stay alert for unusual customer activity, including the rapid movement of funds from a customer account to a brokerage or investment account which is out of line with the customer’s normal activity.
  • Stay alert for unusual transactions, including large deposits into a bank account from multiple individuals' bank or brokerage accounts followed by the rapid movement of funds to a bank account at another financial institution or another jurisdiction.  Proceeds from these scams could move through an FDIC-insured financial institution.