Sign of the tough times: Even National Lampoon execs accused of stock manipulation

Another day. Another stock manipulation charge. This time against National Lampoon. Yes, that name does ring a bell doesn't it? Could it really be what I think it is? Why, yes, it is none other than the company that holds the rights to the infamous college movie from the late 70's: Animal House. I'm not into that type of movie and think it's overrated but many would disagree with me. In any case, clearly their movies haven't been generating much money lately, given that the executives are being accused of illegally propping up the stock price:

Federal prosecutors in Philadelphia have filed charges against the chief executive officer and other executives at National Lampoon Inc. [NLN-A], saying they tried to inflate the company's stock price.

Los Angeles-based National Lampoon owns the rights to the “Vacation” and “Animal House” movies, among others. Prosecutors charged seven people with conspiracy and securities fraud on Monday.

Prosecutors said the company manipulated prices by paying kickbacks to people to buy and hold stock. Authorities said that activity created the illusion of market interest.

One of the risks of investing in microcaps and smallcaps is the potential for market manipulation, insider trading, and such dubious schemes. These things can happen to any company but is less of a concern with large caps. If you wanted to drive up the stock of a large-cap by 5%, you may need to spend hundreads of millions of dollars; in contrast, a typical executive or a board member, who is almost always wealthy, can easily manipulate microcaps and smallcaps to their liking.


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