Death of the Unicorns
A look at the market for these billion-dollar startups.
Death of the Unicorns
Line of Inquiry: Christian Leuz on Pump-and-Dump Schemes
Not everyone who invests in pump-and-dumps is duped into doing it.
- April 18, 2018
- CBR - Finance
The mechanism of pump-and-dump fraud is reasonably uncomplicated—artificially ginning up demand for a stock to raise the price before unloading a large quantity of it—but some of the most fundamental questions about such schemes have gone unanswered in research, making it more difficult for regulators to effectively protect investors. A group of researchers including Chicago Booth's Christian Leuz merged investor data with information on known pump-and-dumps to identify who participates in such fraud, and why. They find that not everyone who invests in pump-and-dumps is duped into doing it.
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