But when the Nasdaq opened, it quickly dropped. Though the stock pools of the 1920s would clearly be illegal today, because investors acted in concert with the express purpose of influencing prices, painting the screen is a much murkier affair. To seasoned securities lawyers, a high pre-opening quote sometimes looks and smells like an attempt to manipulate a stock's price. But in any given case, this is hard to know for sure-and certainly hard to demonstrate. It's not an easy thing to prove, and the courts have held us to very high standards.
Intent is key.
Large buy or sell orders can influence prices, for example, but that isn't manipulation. What is illegal is deliberately trying to artificially affect stock prices in order to mislead others. Market makers, whose job is to bring buyers and sellers together in the frag-mented Nasdaq market, are permitted to post prices before the opening without being committed to buy or sell the stock at these prices. To some market watchers, all the ma-neuvering is reminiscent of what went on in the 1920s and early 1930s, before the Securities Exchange Act of 1934 outlawed acting jointly to tilt share prices. Until then, some prominent Wall Streeters considered it sport to form pools to influ-ence stocks.