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 Maryland, pump and dump schemes are considered a form of securities fraud and are illegal under both state and federal law. The Maryland Securities Act, as well as federal legislation such as the Securities Exchange Act of 1934, prohibits manipulative and deceptive practices in connection with the purchase or sale of securities. This includes making false or misleading statements about a company to artificially inflate stock prices (the 'pump') and then selling off the stock at the inflated price for a profit (the 'dump'), which often results in financial losses for other investors. Violations of these regulations can lead to significant penalties, including fines and imprisonment. The enforcement of these laws is carried out by the Maryland Attorney General's Securities Division and federal agencies like the Securities and Exchange Commission (SEC). Investors are encouraged to be cautious of unsolicited investment advice and to conduct thorough research before making stock purchases.