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Technology Stocks : Apple Inc.

AAPL 262.22

-1.9%

Jan 6 3:59 PM EST

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To: Randy Tidd who wrote (11799)	4/21/1998 1:03:00 AM
From: HerbVic	of 213180

Randy, The practice is called churning. A MM who stands to loose big on the sudden rise of an issue may buy and sell the issue repeatedly to hold the price steady in the face of rising demand. The formula is simple if one has the resources. As the issue's price rises, the MM sells, then sells, then sells until the price direction reverses. When it falls sufficiently, he may then start buying back the issues at a lower price, metering the volume so as not to drive the price up too quickly. Then the cycle starts over again and repeats as necessary. The true efficiency of the market is lost in the artificially inflated volume and the price of the issue is controlled or at least limited. It is my understanding that the practice is illegal, but very hard to prove. Anyone who would like to add to or subtract from this explanation is welcome to chip in their thoughts. I am only an egg. HerbVic

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