Which term refers to illegally changing a stock price by misleading investors?

• A. Fraud
• B. Stock Manipulation
• C. Insider Trading
• D. White-Collar Crime

Answer: (B)

Stock manipulation means deliberately moving a stock’s price by deceiving investors or creating a false impression of demand or value. This can happen through actions like pump-and-dump schemes, spreading misleading rumors, spoofing orders that mislead the market, or executing wash trades to fake activity. These tactics aim to influence others’ trading decisions based on false signals, which fits the scenario of illegally changing a price by misleading investors.

Fraud is a broad term for deception to gain an unfair advantage, but it doesn’t specify manipulating a stock’s price. Insider trading involves trading on material nonpublic information, which is illegal, yet it isn’t defined by efforts to manipulate price through misleading signals. White-collar crime covers a wide range of non-violent financial offenses, not the specific act of price manipulation. So the precise term that captures illegally changing a stock price by misleading investors is stock manipulation.