FINANCIAL HOUSEKEEPING | Safe harbor
In regulation, a safe harbor protects individuals or corporations from the legal consequences of certain activities they undertake. For example, a firm filing forecasts with the Securities and Exchange Commission has a safe harbor from individuals and businesses that use the forecast.
This means that if a brokerage firm relies on these forecasts, invests on them and then loses money, they have no recourse with the firm so long as the forecasts were prepared in good faith.
Safe-harbor rules also apply to employers giving minimal advice on retirement savings, where the company can represent what a retirement- savings plan could grow to without guaranteeing returns or making promises for which it could be held liable.
SHORT COURSE | “Poop and scoop”
A “pump and dump” scheme is an illegal plan to hype a stock so that the people promoting the issue can sell shares and reap a quick profit; a “poop and scoop” is kind of the opposite.
It’s the illegal practice of spreading bad news and fictitious negative information about a stock with the goal of driving the price down so that shares can then be purchased at a bargain. While many people believe that pump-and-dump schemes are easy to spot, poop-and-scoop deals can be more deceptive, as they frequently are based on some potentially bad news, inflated into a worst-case scenario. Many market observers believe that short-sellers – who invest in a way that creates profits when a security declines in value – frequently poop on stocks to drive them down so that they can lock in a gain.
