Bear Raid Law and Legal Definition
Bear raid is a slang term. It refers to high volume stock selling by large traders with the goal of driving down stock price in a short time. The term is derived from the common use of 'bear' or bearish in the language of Market sentiment to reflect the idea that investors expect downward price movement.
It is a type of stock market strategy, where a trader or group of traders attempt to force down the price of a stock to cover a short position. A bear raid can be done by spreading negative rumors about the target firm, which puts downward pressure on the share price. This may be a form of securities fraud. On the other hand, traders could take on large short positions themselves, with the large volume of selling ideally causing the price to fall, making the strategy self perpetuating.
Federal law prohibits bear raids. It is also known as bear drive.
The following is an example of a case law referring to the term:It is not necessary to condemn all efforts to support the market price of a stock; no such case is presented here. No doubt situations have arisen and will continue to arise where such a policy is justifiable as, for example, to protect stockholders from a "bear" raid or in order to insure a market when a stock is first introduced to the public on an exchange. A reasonable and honest purpose should be an adequate shield to the innocent. [Goess v. Lucinda Shops, Inc., 93 F.2d 449, 454 (2d Cir. 1937)].