Daisy Chain
Categories: Tech, Ethics/Morals
Unscrupulous investors are everywhere, and can be even more dangerous when they all get together.
A daisy chain is a group that decides to artificially inflate the price of an equity security by buying and selling among themselves.
Small cap stocks that have a lower trading volume are particularly vulnerable. Unsuspecting investors see a rise in volume for a stock and want to get in on the action of rising prices. Soon after they buy the stock, the daisy chainers sell their shares, and frequently the stock continues to depreciate. The good news is that there are severe fines and penalties if they get caught.