spoofing investment & finance definition

A fraudulent trading practice that occurs when a trader who owns a particular stock places a large buy order through electronic trading systems and then cancels it within seconds. The order causes the market to shoot higher, which makes it appear that there is high demand for the stock. Spoofers exploit the SEC’s Limit Order Display Rule, which requires that market makers display the full size of their customer’s limit orders and the desired prices. Customers place limit orders with brokers in order to specify the acceptable price ranges for buying or selling a stock.