According to Scott Moritz' employer at the Street, quote:
"A lot of times when I was short at my hedge fund—meaning I needed [the market to go] down—I would create a level of activity before [the market opened] that could drive the [pre-market] futures [down]. … Similarly, if I were long, and I wanted to make things a little bit rosy, I would go in and [buy] a bunch of stocks and make sure that they were higher …
It's a fun game, and it's a lucrative game. You can move [the market] up and then fade it—that often creates a very negative feel. … That's a strategy very worth doing. … I would encourage anyone in the hedge fund game to do it. Because it's legal. And it is a very quick way to make money. And very satisfying."
Mr. Moritz' employer further states:
"[Y]ou've really got to control the market. You can't let it lift. When you get a [bellwether stock that is soaring like] Research in Motion, it's really important to use a lot of your firepower to knock that down. … So, let's say I were short. What I would do is hit a lot of guys with RIMM [sell a lot of Research in Motion stock to a lot of investors]. "
Additionally, Mr. Moritz' employer says this about fomenting:
"Now, you can't "foment." That's a violation. You can't create yourself an impression that a stock's down. But you do it anyway, because the SEC doesn't understand it. [my emphasis]. That's the only sense that I would say this is illegal. But a hedge fund that's not up a lot [this late in the year] really has to do a lot now to save itself.
This is different from what I was talking about at the beginning where I was talking about buying the QQQs and stuff. This is actually blatantly illegal. But when you have six days and your company may be in doubt because you're down, I think it's really important to foment—if I were one of these guys—foment an impression that Research in Motion isn't any good. Because Research in Motion is the key today."
and finally, here's what the FCC says:
According to the SEC's Web site, market "manipulation" is:
intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security. Manipulation can involve a number of techniques ... [such as] spreading false or misleading information about a company … or rigging quotes, prices or trades to create a false or deceptive picture of the demand for a security. Those found guilty of manipulation are subject to criminal and civil penalties.