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Over 700 finance terms, Shmooped to perfection.
In this scheme, two different brokerage firms illegally try to manipulate a market. They trade stocks or other securities back and forth between each other without gaining or losing money or gaining any advantage.
All those trades catch the greedy eye of investors, who think that the stock seeing all the action is "hot"—and they want in. The price of the stock goes up thanks to all the trades, and the brokerages are sitting pretty on stock or securities that they can now sell for more.
It's all quite illegal, of course, so there's major fallout if they're caught.