TY  - UNPD
A1  - Leuz, Christian
A1  - Meyer, Steffen
A1  - Muhn, Maximilian
A1  - Soltes, Eugene
A1  - Hackethal, Andreas
T1  - Who falls prey to the Wolf of Wall Street? investor participation in market manipulation
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 609
N2  - Manipulative communications touting stocks are common in capital markets around the world. Although the price distortions created by so-called “pump-and-dump” schemes are well known, little is known about the investors in these frauds. By examining 421 “pump-and-dump” schemes between 2002 and 2015 and a proprietary set of trading records for over 110,000 individual investors from a major German bank, we provide evidence on the participation rate, magnitude of the investments, losses, and the characteristics of the individuals who invest in such schemes. Our evidence suggests that participation is quite common and involves sizable losses, with nearly 6% of active investors participating in at least one “pump-and-dump” and an average loss of nearly 30%. Moreover, we identify several distinct types of investors, some of which should not be viewed as falling prey to these frauds. We also show that portfolio composition and past trading behavior can better explain participation in touted stocks than demographics. Our analysis offers insights into the challenges associated with designing effective investor protection against market manipulation.
T3  - CFS working paper series - 609 
KW  - Market manipulation
KW  - Pump-and-dump schemes
KW  - Securities regulation
KW  - Fraud
KW  - Investor protection
KW  - Lottery stocks
KW  - Household finance
Y1  - 2018
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/47963
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-479633
UR  - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3289931
IS  - November 2017
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -