Critical Lessons from the Facebook Scam: A Blast from the Past

The Facebook pump-and-dump scam has played out just as I predicted. After only a couple of months, naive shareholders who feel for this scam have already lost nearly $45 billion as the result of a collapse in the share price of more than 50% from the IPO high of $45.

But this $45 billion hasn't been a loss for those on the other side of the trade. Short sellers aside, the fact is that the Facebook scam has created several billionaires overnight, namely the executives of Facebook, not to mention the huge payday for the private equity and venture capital funds which capitalized on the pump-and-dump scam orchestrated by both the financial industry and the media.

And who do you think purchased the vast majority of shares?

Fund managers of course; mainly mutual fund and pension fund managers.

Now who do you think manages most of these funds? Are they gentiles? Wrong.