Stock-price manipulation

It is generally agreed that speculators can make profits frominsider trading or from the release of false information. Bothforms of stock-price manipulation have now been made illegalIn this article, we ask whether it impossible to make profitsfrom a different kind of manipulation, in which an uninformedspeculator simply buys and sells shares. We show that in a rationalexpectations framework, where all agents maximize expected utility,it is possible for an uninformed manipulator to make a profit,provided investors attach a positive probability to the manipulatorbeing an informed trader.