A stock basher spreads rumors about a security to push the trading price down. Bashers may act on their own account or represent third parties, and may engage in a coordinated attack with a group of people to make their claims seem more legitimate. Individuals suggesting that a company might be headed for trouble might not attract attention, but multiple rumors appearing to originate from different sources are apt to be taken more seriously. Environments like Internet message boards can be particularly fertile ground for stock bashers.
This activity may be illegal under laws governing activities on the stock market, depending on regulations. They could be considered a form of securities fraud if bashers operate with the goal to drive prices down to damage a company or create an opportunity for investors. People acting in concert with the stock basher could be engaging in what is known as a poop and scoop scheme. First, people make negative comments to lower stock prices, and then they buy the stocks as they hit bottom, selling them once the values rise again.
The Internet can be ideal for stock bashers. Message boards and other media allow people to quickly exchange information without verification, although some communities may police themselves to keep the quality of the conversation high. Bashers may sign up for new accounts, establish a reputation, and then start claiming that a company is in trouble and stock prices could drop. They can also show up on comments sections on news articles and other resources to distribute false information.
If a stock basher can be identified, steps may be taken. In cases where the activity is clearly illegal, information may be provided to authorities to help them apprehend the culprit. Companies victimized by a stock basher may be able to claim financial damages and could request court orders to limit the basher’s activities in the future. For example, they could ask that a known stock basher be barred from participation in communities of investors online.
Some companies retain security consultants and social media experts who remain alert to the signs of bashing and conduct investigations to identify bashers. Serial offenders may crop up under a number of pseudonyms, which could make it necessary to trace by Internet protocol (IP) address, language used, and other identifiers. It may be possible to pursue action through a hosting service, as stock bashing could violate terms of service, especially if it is defamatory in nature.