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Simple English definitions for legal terms
daisy chain
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A quick definition of daisy chain:
A daisy chain is when a group of people who sell stocks work together to make the price go up. They do this to trick other people into buying the stock at a high price. Once the other people buy the stock, the group of sellers quickly sell their own stock for a profit, leaving the buyers with overpriced stock. This is not allowed and is against the law.
A more thorough explanation:
A daisy chain is when a small group of securities dealers buy and sell the same stock repeatedly to drive up the price. They do this to attract unsuspecting buyers who will invest in the stock. Once the buyers invest, the traders sell the stock for a quick profit, leaving the buyers with overpriced stock. This is illegal.
A group of securities dealers buy and sell shares of XYZ company among themselves, driving up the price. They then convince others to invest in the stock, claiming it is a great opportunity. Once the unsuspecting buyers invest, the traders sell their shares for a profit, leaving the buyers with overpriced stock that is now worth less than what they paid for it.
This example illustrates how a daisy chain works. The traders manipulate the stock price to attract buyers, then sell their shares for a profit, leaving the buyers with a loss. This is illegal because it is a form of market manipulation that harms investors.