- This refers to a form of financial manipulation where investors in a stock, or any other financial security, try to temporarily increase its price in order to sell their holdings at a favourable price.
- Stock manipulators usually bring about a sharp spike in the price of the targeted stock by spreading exaggerated news that is favourable to the stock.
- It is usually targeted at small and mid-cap stocks which have low liquidity, and so can be influenced more easily by manipulators.
- Even large-cap stocks, however, can be manipulated temporarily by bigger investors wanting to make a quick buck. Pump and dump schemes have been outlawed in markets across the world.