Manipulation

In stock speculation this word is applied to the operation of working stocks up or down or both ways. - A not uncommon method of manipulating a stock is by washing, which consists in buying and selling the stock at the same time. The speculator who seeks to advance a stock in price by manipulation gives to one broker an order to bid it up on a When a stock advances or declines in price (as the case may be) to near the limit of the margin furnished the broker is privileged if the customer does not respond to a call for additional margin to sell the stock that has been bought or to buy back the stock that has been sold short. The broker is bound to give to the customer reasonable and customary notice when additional margin is required unle there is an agreement beforehand to the contrary. y Stocks or bonds bought on margin by a broker for a customer are at all times, in the absence of an expre agreement to the contrary, subject to the order of the customer. The customer has the right to po e ion of the stocks or bonds. upon payment of the purchase price and the commi ions and proper expenses. In the absence of an expre agreement the broker may at his option upon reasonable notice require a customer to take up, that is, pay in full for the stocks which he is carrying for the customer. If the customer is short of stocks the broker may demand that he buy back the stocks or transfer the operation to another broker. If a speculator buys on the New York Stock Exchange 100 shares of stock at I00 on Io per cent margin his broker re- _ ceives the stock and pays $10,000 for it to the broker from whom it was purchased. The buying broker has received $1,000 from his customer and he advances $9,000 to the customer, holding the stock as security for the money so advanced. On the $9,000 he charges interest (usually 6 per cent). If the stock is sold later at 110 $11,000 is received for it. The gro profit is $1,000, but from this amount is deducted the broker’s commi ion and the interest on the money advanced by the broker. If a speculator sells a stock short he puts up margin the same as when he buys long stock—buys not in discharge of a short contract but to sell again. If the stock is sold at 100 and is bought back at go the speculator’s profit is $1,000, le the broker’s commi ion. Ordinarily no interest has to be paid on stock sold short. (For explanation see Interest). 302