Whats a “short-and-distort” scheme?
In a “short-and-distort” scheme, fraudsters manipulate the share price of a company by spreading negative information about it. They begin by ‘shorting’ the stock – that is, selling borrowed stock in the expectation that the price will subsequently fall, allowing the stock to be repurchased at the lower price. The difference between the price that the stock was sold at and the price at which it is repurchased determines the seller’s profit. To make the scheme work, the scammers must ensure that the price will indeed fall after they’ve sold the stock. They do this by spreading negative information about the company, sometimes true, sometimes false. Speculators could theoretically alternate “pump-and-dump” with “short-and-distort”, going through repeated buy-sell cycles, using positive information to drive up the share price and negative information to drive it down. In practice, “short-and-distort” schemes seem to be rare. While stock spammers do indeed seem to work cyclically, they see
