poop and scoop

Poop and Scoop

To spread false rumors about a security maliciously such that its price drops and then to buy the same security at the new, deflated price. A small group of investors may poop and scoop to make a quick profit when the security rises back to its former level. Pooping and scooping is a form of price manipulation and, as such, is illegal. This concept should not be confused with a poop, who is a person with inside information. See also: Pump and Dump.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

poop and scoop

The illegal practice of spreading negative information in order to drive down a stock price with the goal of purchasing shares at a bargain price. Compare pump and dump.

Case Study Many investment scams involve inflating the price of a stock that is owned in order to dump shares on the public at a profit. In some instances, however, the fraudulent activity involves deflating the market price of a stock that has been sold short so that the stock can be bought back at a lower price. In late 2000 a 23-year-old man pleaded guilty to securities fraud for issuing fake negative press releases for Emulex Corporation. The man had sold short 3,000 shares of the stock in order to profit from an expected decline in price. When the stock price started rising, he used knowledge gained as a former employee of an online distributor of press releases to write and distribute a phony release that stated Emulex's chief executive had quit and the firm was restating its quarterly earnings from a profit to a loss. The press release caused the shares of Emulex to plunge until trading was halted on the Nasdaq. According to government charges, the man made a profit of nearly a quarter of a million dollars by covering his short position and subsequently purchasing additional shares of the company at the artificially low price resulting from the fraudulent press release.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.