A review and reflection on the movie “The Scam”
The Korean movie “The Scam” is no Wallstreet but its a good movie that describes how fraud happens in the world of the stock market. The movie basically narrates a syndicate/gang’s plot to ‘scam’ a lot of investors by hyping, pumping, and then dumping a shell company for a big profit and an ‘ant’s’ (tsupitero) role in it. A lot of you might think that this movie is just pure fiction but in fact a lot of it is actually happening. Immediately after the movie, we were reminded of a syndicate of people (yes here in the Philippines!) that exactly does the same thing! Here’s how they do:
1) Buy a good chunk of a ‘shell company’
2) Hype it by saying that it will be merged to another company or will be bought by another company (sounds familiar)
3) Hype it by saying that a foreign fund or a big fund at least will invest in the company (again, sounds familiar?)
4) use of ‘matching transaction’ or split cross where one broker sells a good amount of volume at a price at a specific time where another broker will quickly buy it (makes an impression that there’s demand but its actually the same group buying and selling); ‘pasa load’ as some say
5) raising the price or doing ‘buy ups’
6) once the stock reaches the group’s desired exit point is reached, they’ll sell everything to unknowing people and that’s when it will crash.
Sadly a lot of retail ‘investors’ are attracted to such stories of mergers, mine find or what not which the syndicate try to pry on which they do successfully time and time again. Greed is a factor here because indeed if we catch the temporary bull ride, we could be rewarded handsomely in a short span of time. But not every one can exit on time. In fact most that are not in the know get burned. Just check the local companies that zoomed really high during the first part of the year (2012) and then crashed shortly after. They depict the same exact story.
One interesting point that the movie says is that “companies don’t grow double or triple in a day or fail in a day but in the stock market billions are gained and lost in a day.” Its basically greed that gets tangled in the market which the same group will take advantage of. You will save a lot of headache and heartache if you first look at the company, its people who actually work and what the company does before the stock price. Simply, don’t get scammed! Learn and do your due diligence before trusting anyone.
Watch the movie! You will definitely learn a lot. 🙂