Unhedged – The New Pump and Dumps
Hosts: Katie Martin, Robert Armstrong, George Steer
Date: August 21, 2025
Episode Overview
In this episode, Unhedged dives deep into the world of modern pump and dump scams, dissecting their anatomy and growth on US public markets, with a spotlight on recent US-listed Chinese stocks. Host Katie Martin is joined by Robert Armstrong and US Capital Markets Correspondent George Steer, who has been investigating the issue closely. The team unpacks how these schemes operate, why they're proliferating, who is targeted, and the ecosystem of blame and accountability stretching from exchanges to tech platforms. This episode is a cautionary tale for retail investors and a critique of today's “take your chances” markets.
Key Discussion Points & Insights
1. Rise in Pump and Dump Scams
- The episode opens by noting a 300% jump in pump and dump reports to the FBI, underscoring a resurgence of investment scams, particularly in regulated markets like the NASDAQ.
- Katie Martin: “It is a wonderful, wonderful time to be a scammer. It is just so incredibly easy… It's also, it seems alarmingly easy to lure people into investment scams, even on regulated public stock markets.” [00:25]
2. Recent High-Profile Cases
- George Steer describes how he discovered a group of seven US-listed Chinese stocks, which skyrocketed and crashed over days, wiping out retail investors.
- Notable Example: Regencyl, a money-losing herbal remedy maker in China, was at one point valued at $40 billion before collapsing. [02:39]
- Structurally, these schemes involve insiders selling out at the peak, leaving retail holders with worthless shares.
3. The Anatomy of a Modern Pump and Dump
- Scam Mechanics:
- Scams have shifted online, commonly starting with a social media advert (often faked with celebrity or media endorsements) leading people into WhatsApp groups, where they're warmed up over weeks or months. [05:00]
- George Steer: “They’ll warm you up... months later they’ll say, hey, we’ve identified this small company. Maybe you should try dipping your toe in, put $100 in. Then over weeks…try adding 10 grand, 20 grand…” [06:03]
- Industry Targets:
- Companies targeted are often small cap, microcap Chinese IPOs, but include US firms too.
- There’s no clear business pattern except they are often loss-making and thinly traded.
4. Insider/Company Involvement
- There’s no direct evidence these companies are in on the scam; many are unreachable and based overseas, often with a very small trading float, allowing price manipulation with limited effort.
- Insider Shareholding: “The executives control or hold 80% of the shares.” [07:33]
5. Victims – Who Gets Scammed?
- Victims are predominantly middle-aged and older Facebook users – people with meaningful savings.
- George Steer: “Everyone I spoke with is kind of 40, 50, 60... people have lost anything from $12,000 to... $800,000.” [08:44–09:03]
- Victims often feel shame, embarrassment, genuine fear about the future. [09:29]
6. Platforms & Responsibility
- Why are dubious companies on major exchanges? NASDAQ profits from being the destination for small-cap IPOs and is incentivized to list as many companies as possible. [10:37]
- Robert Armstrong: “There is a problem that the halo of NASDAQ... is helping these scams take place.” [11:29]
- Underwriting Banks: Mostly small, New York/New Jersey firms (“bilge bracket banks”) bring these IPOs to market, not Wall Street giants. [12:05]
7. Cultural Attitudes & Regulatory Gaps
- Discussion about American attitudes: is this just another risk of capitalism (“no crying at the casino” or “nocac”), or a regulatory failure demanding intervention?
- Robert Armstrong: “No crying at the casino... there is a take your chances slice of capitalism, caveat emptor... Part of me feels that way.” [13:40]
- Historic Context: Pump and dump was an accepted part of US markets pre-1930s regulation, echoed in crypto markets today. [14:16–15:24]
8. The Role of Social Media and AI Impersonators
- Social media platforms, especially Facebook, are enablers via AI-generated endorsements.
- Memorable Moment: Scammers used an AI likeness of FT’s Martin Wolf to pump a stock. [16:10]
- Katie Martin: “The world has changed. Social media... these are credulity machines... Maybe we should be asking, how is Facebook responsible?” [16:53]
9. Can You Spot These Scams?
- Yes—often glaring. Stocks with no news surfacing as top performers, up hundreds of percent.
- George Steer: “It’s pretty easy to spot, honestly… a tiny company you’ve never heard of is suddenly up 900%. Click on that company. They’ve not put any news out. There’s no obvious reason…” [18:25]
10. Accountability – Who’s to Blame?
- Nobody’s taking responsibility: Not Meta for the ads, not NASDAQ for the listings, not the SEC for oversight. The buck is endlessly passed.
- George Steer: “No one will accept responsibility for what’s going on... It’s hard to pin the blame on any one party so like the, so the scams, unfortunately, continue.” [19:44]
11. FOMO & Human Nature
- Robert Armstrong: “Don’t sleep on envy… it is a powerful emotion.” [22:12]
- The scammers exploit FOMO in boom markets, preying on those eager to participate in rapid gains. [20:32]
Notable Quotes & Memorable Moments
- “It is just so incredibly easy to call someone up, pretend to be from their bank and extract crucial personal details. So you can make innocent people's money vanish.”
– Katie Martin [00:24] - “We found one company called Regencyl… At one point this summer, it was worth $40 billion. And then lo and behold, shock, horror. The shares crashed over the space of a few days.”
– George Steer [02:50] - “Everyone who I've spoken with was added to one of these WhatsApp groups via an advert on Facebook. So it's fair to say… everyone I spoke with is kind of 40, 50, 60… I spoke with one guy who'd lost $800,000.”
– George Steer [08:44–09:03] - “No crying at the casino... caveat emptor, cafe tour and nocac. No crying at the casino.”
– Robert Armstrong [13:40] - “Social media... credulity machines... Maybe we should be asking, how is Facebook responsible?”
– Katie Martin [16:53] - “One person was enticed to buy this by an AI version of the FT's own Martin Wolf.”
– George Steer [16:10] - “If this guy... can see this stuff happening from space, why is it just allowed to carry on? This strikes me as crazy.”
– Katie Martin [19:37] - “No one will accept responsibility for what's going on... so the scams, unfortunately, continue.”
– George Steer [19:44]
Timestamps for Important Segments
- 00:25 – Opening discussion on the ease of scamming in today's markets
- 02:39 – How modern pump and dump scams work, Chinese stock cases
- 05:00 – Migration from phone scams to Facebook/WhatsApp scams
- 08:44 – Victim profiles and personal loss stories
- 10:37 – Why NASDAQ lists so many microcap foreign companies
- 12:05 – “Bilge bracket” banks' role in underwriting risky IPOs
- 13:40 – Cultural perspective: “No crying at the casino”
- 15:21 – The legacy and persistence of pump and dump tactics
- 16:10 – AI-impersonator scam featuring Martin Wolf
- 16:53 – Social platforms' role and lack of accountability
- 18:25 – How to spot (and flag) a pump and dump as it happens
- 19:44 – The accountability “hot potato” and why scams persist
- 20:32 – FOMO psychology and scammer tactics in bull markets
Conclusion & Takeaways
- Pump and dumps are thriving in plain sight on major US exchanges, often leveraging the trust these platforms create.
- Scam mechanics have evolved—from cold calls to highly engineered social media and messaging app campaigns, amplified by AI deepfakes and fake endorsements.
- Victims are not naïve, but are often older, capable people seduced by psychological manipulation and FOMO—leading to utterly devastating losses.
- Responsibility lies everywhere and nowhere: from exchanges to underwriters, from tech platforms to regulators, with each blaming the complexity of the problem.
- Investor vigilance remains crucial. As Katie Martin underscores: “Trust your gut. If it feels wrong, it is probably wrong.” [20:32]
For more on this episode and similar financial deep-dives, subscribe to Unhedged.