One of the big problems that may have contributed to the crash of 1929 was the widespread abuse of shareholders and speculators by brokers colluding on manipulating stock prices. In the fallout following the crash many of these practices were rendered illegal. It reduced their occurrences, but they still happen.

Pump and dump scams, similar but not exactly the same thing as "stock touting" occur when a single person or company, or a small group of like minded individuals control the market for a specific issue.

Similar motives drive pump and dump perpetrators and the hawkers of securities that run telemarketing operations. A single group of individuals hold a stock of dubious value, they want to sell out of it at a profit, so they create a market for it. In the case of pump and dump scams the stocks are usually publicly traded, though still likely to be cheap penny stocks.

When a small cartel make the market for an issue, they may be able to make a large profit by promoting the stock with fictitious or exaggerated press reports, "leaks" of "inside information", heavy promotion to brokerage clients, promotion of the stock by gurus to subscribers of their newsletter or otherwise touting the stock.

As the stock is quite thinly traded, small amounts of information may send the price of the stock spiraling upward, because few people are willing to sell the stock or even few people (other than associates of the conspirators) own it in the first place.

A steady stream of predictions and rumours hit the market, involving takeovers, mineral strikes or scientific discoveries, all of which soon become reflected in stock prices as the deliberately manipulated stock begins to rally. Soon the trend is noticed by genuine traders and volume increases while the trend builds strength. Traders become the buyers, but who are the sellers?

As soon as the stock starts to take off, the promoters begin to sell their holdings, gradually reducing their own holding until they hold virtually nothing. Once they have finished distributing their stock onto traders, the "pumping" stops. Traders, who had the stock "dumped" on them, may realise that the stock is worthless, or will simply decide to start taking profits. Either way, once the original conspirators have gotten rid of their holdings, hopefully at a great profit, their interest in promoting the stock disappears and no one ever hears of it again. Some of the "investors" go on to be long term holders of this speculative issue, others sell immediately at probably a substantial loss. Few make a profit, other than those who wanted to sell this turkey in the first place.