I was reading about the whole affair of the billionaire Adani – he has allegedly engaged in fraud by ‘stock price manipulation’ through offshore ‘shell companies’. I don’t get any of it.
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In very basic terms, fraud is the crime of tricking someone into giving you money.
Securities fraud is a particular type of fraud, where you convince people to buy things for more than they are worth. One of the most common kinds of securities fraud is called a “pump and dump” – you generate interest in a stock by getting your buddies to buy shares, which makes the price go up because there’s high demand, and then other investors want to invest in the stock because the price is going up. The price rises higher and higher, and suddenly your buddies stop buying the stock, and now these investors are stuck with stocks that are actually worthless because no one wants to buy them.
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