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1. An illegal practice in which an investor with a long position on a security makes a buy order for that security and immediately cancels it without filling the order. Spoofing tends to increase the price of that security as other investors may then issue their own buy orders, which increases the appearance of demand. The first investor then closes his/her long position by selling the security at the new, higher price. Spoofing is a form of market manipulation. See also: Pump and dump.

2. The act of impersonating a person, usually over the Internet, with the intention of gaining access to another's personal or financial information. It is a means of identity theft.


Some market analysts maintain that the increased volatility in stock markets may be the result of an illegal practice known as spoofing, or phantom bids.

To spoof, traders who own shares of a certain stock place an anonymous buy order for a large number of shares of the stock through an electronic communications network (ECN). Then they cancel, or withdraw, the order seconds later.

As soon as the order is placed, however, the price jumps. That's because investors following the market closely enter their own orders to buy what seems to be a hot stock and drive up the price.

When the price rises, the spoofer sells shares at the higher price, and gets out of the market in that stock. Investors who bought what they thought was a hot stock may be left with a substantial loss if the price quickly drops back to its prespoof price.

Spoofing is a variant of the scam known as pump and dump.

References in periodicals archive ?
Several stock Bollywood formulae were also spoofed, which was a prime reason of popularity of the film.
Businesses that apply e-mail authentication can safely assume that legitimate communication will not use spoofed addresses, and there will be no false positives in rejecting these types.
The open rate of spoofed messages breaks down as follows:
Calls with spoofed numbers can and do come from all over the world and account for a significant and growing proportion of nuisance calls made to consumers in English-speaking countries.
More sophisticated brand spoofs incorporate a Microsoft Internet Explorer bug that makes the Internet browser address bar show the URL of the spoofed company, but actually displays content from spammers' Web sites.
The Reverse Authentication technology is based on the premise, why anyone would trust or should not trust entering their personal data on a web page without a foolproof assurance that it has not been spoofed.
Though you entered the correct URL, your local name server had been spoofed into believing that the bank's domain name corresponded to the address of a web server run by hackers.
Rather than sending a deceptive email to lure victims to spoofed Websites, pharming involves manipulating a DNS server so that legitimate Website requests are redirected to spoofed sites.
Phishing and pharming attacks use spoofed email addresses and fraudulent Web sites that hijack trusted brands of well-known banks, online retailers, Internet service providers (ISPs) and credit card companies to fool recipients into divulging personal financial data such as credit card numbers, account usernames and passwords, and Social Security numbers.