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Pump and Dump: The Rancid Rules of the New Economy, by Robert H. Tillman and Michael L. Indergaard. New Brunswick, NJ: Rutgers University Press, 2005. 337 pp. $25.95 cloth. ISBN: 0813536804.
The term "pump and dump" refers to the practice of talking up a company's stock, then selling it at a profit. Over the past decade, by using digital technology, day traders and boiler room telemarketer-brokers succeeded in elevating the practice to an art form. Some of them incurred criminal liability; others narrowly avoided it.
Pumping and dumping, however, was by no means the exclusive province of shady, small-fry promoters. On a much larger and grander scale, corporate executives unrealistically trumpeted their companies' financial prospects, then sold their own holdings at a profit before the market caught up with reality. These were the days of the high-tech boom (and bust), and enormous fortunes were made.
This book is a narrative account of some of the more egregious corporate crimes of the past few years, including those leading to the demise of Enron and WorldCom. It provides an excellent overview of the life and times of such one-time high flyers as Kenneth Lay and Bernard Ebbers, as well as the contributions of the many professional advisers who facilitated their financial dealings.
The authors argue that...