Market manipulation: A comprehensive study of stock pools

Using a new hand collected data set, this paper examines in detail a classic account of stock market manipulation, the “stock pools” of the 1920s, which prompted the current antimanipulation rules in the United States. We examine abnormal turnover and returns and the relation between them, as well as the long-term performance of the selected stocks. We conclude that the evidence suggests informed trading rather than manipulation. Our findings have implications for regulatory policy as well as the investigation and prosecution of manipulation cases.