5 ms·

Dumb question: is buying a domain, posting a hoax story about a company on that domain, and then executing trades to take advantage of the fluctuation in that c

Dumb question: is buying a domain, posting a hoax story about a company on that domain, and then executing trades to take advantage of the fluctuation in that company's stock price illegal?

kchoudhu 11y ago
Yup.
404error 11y ago
I'm not sure, I wonder if The Onion has ever affected stock prices.
- justincormack 11y ago
  Journalism is generally exempted from securities regulations (if they are not trading). Comedy the same I presume.
  - 404error 11y ago
    I guess this explains the disclaimer in all of Fool.com's articles. The author of the article tends to disclose if he/she holds any positions.
    - jimminy 11y ago
      It's actually a legal requirement as of a few years ago, for interests to be disclosed in the case of endorsements, or critical pieces on competition. If that interest isn't already clear. https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking https://www.ftc.gov/tips-advice/business-center/guidance/ftc...
- celticninja 11y ago
  Big difference with this scenario though as this article had an intention to deceive, the onion makes it very clear it is satire.
slg 11y ago
It is a pump and dump mixed with fraud plus likely trademark and copyright violations imitating Bloomberg. It is certainly illegal. EDIT:Fixed a typo.
- 404error 11y ago
  First you pump then you dump. :)
  - slg 11y ago
    Oops, typo. Although I am curious what a dump and dump would accomplish...
    - 404error 11y ago
      If you short the stock I believe the dump and subsequent dump would be in your favor.
    - tedunangst 11y ago
      If you had a bunch of puts, sufficient dumping might be enough to create a panic, and then the puts would be worth more than the loss from dumping.
    - bcg1 11y ago
      Here is one example: http://www.cnbc.com/id/100630626 http://www.cnbc.com/id/100630626 http://www.ibtimes.com/why-did-gold-crash-april-2013-computerized-trading-one-explanation-1564394 http://www.ibtimes.com/why-did-gold-crash-april-2013-compute... http://www.cnbc.com/id/100665045 http://www.cnbc.com/id/100665045
pmarca 11y ago
Yep.
jscheel 11y ago
That's not even necessary. Look at Yelp's recent fun times. Nothing like a good unsubstantiated rumor to artificially inflate a stock price.

Dumb question: is buying a domain, posting a hoax story about a company on that domain, and then executing trades to take advantage of the fluctuation in that company's stock price illegal?

kchoudhu 11y ago

Yup.

404error 11y ago

I'm not sure, I wonder if The Onion has ever affected stock prices.

justincormack 11y ago
Journalism is generally exempted from securities regulations (if they are not trading). Comedy the same I presume.
- 404error 11y ago
  I guess this explains the disclaimer in all of Fool.com's articles. The author of the article tends to disclose if he/she holds any positions.
  - jimminy 11y ago
    It's actually a legal requirement as of a few years ago, for interests to be disclosed in the case of endorsements, or critical pieces on competition. If that interest isn't already clear. https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking https://www.ftc.gov/tips-advice/business-center/guidance/ftc...
celticninja 11y ago
Big difference with this scenario though as this article had an intention to deceive, the onion makes it very clear it is satire.

slg 11y ago

It is a pump and dump mixed with fraud plus likely trademark and copyright violations imitating Bloomberg. It is certainly illegal. EDIT:Fixed a typo.

404error 11y ago
First you pump then you dump. :)
- slg 11y ago
  Oops, typo. Although I am curious what a dump and dump would accomplish...
  - 404error 11y ago
    If you short the stock I believe the dump and subsequent dump would be in your favor.
  - tedunangst 11y ago
    If you had a bunch of puts, sufficient dumping might be enough to create a panic, and then the puts would be worth more than the loss from dumping.
  - bcg1 11y ago
    Here is one example: http://www.cnbc.com/id/100630626 http://www.cnbc.com/id/100630626 http://www.ibtimes.com/why-did-gold-crash-april-2013-computerized-trading-one-explanation-1564394 http://www.ibtimes.com/why-did-gold-crash-april-2013-compute... http://www.cnbc.com/id/100665045 http://www.cnbc.com/id/100665045

pmarca 11y ago

Yep.

jscheel 11y ago

That's not even necessary. Look at Yelp's recent fun times. Nothing like a good unsubstantiated rumor to artificially inflate a stock price.