Business, Legal & Accounting Glossary
The illegal practice by brokers of creating artificial transactions to give the appearance of activity and interest in a particular security.
Daisy chaining is an illegal practice undertaken by brokers and investors to artificially inflate stock prices for personal gain. Daisy chining entails forging false transactions in order to simulate a dynamic, high-interest environment with respect to a specific security. Once such a condition is achieved, the increasing volume and growth of the stock induced by daisy-chaining attracts unsuspecting investors. Investors who are unaware of daisy-chaining will typically suffer a loss once the hype dissipates. Perpetrators of daisy-chaining, on the other hand, will sell their holdings at an ample profit before the stock tailspins. Stocks with low initial volumes are usually selected for daisy-chaining. Clusters of brokers and investors involved in daisy-chaining are called daisy chains. Daisy chaining is also known as wash selling.
You may want to make sure that you are never accused of any daisy chaining that may ruin your reputation.
You should never do any daisy chaining or your reputation will forever be tarnished and you may go to jail.
The investigation lasted for years, but finally, the firm was caught daisy chaining, and the fallout, as a result, rattled the market for several days.
Wash selling
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This glossary post was last updated: 29th October, 2021 | 0 Views.