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Watered stock information


1869 stock certificate of the Erie Railroad, signed by Jay Gould
Jay Gould, as president of the Erie Railroad, notoriously issued watered stock to defeat a takeover attempt.

Watered stock is an asset with an artificially-inflated value.[1] The term most commonly refers to a form of securities fraud in which a company issues stock to someone before receiving at least the par value in payment.[2]

  1. ^ McCormack, Alfred. 1931. "Review of Stock Watering: The Judicial Valuation of Property for Stock-Issue Purposes". The Yale Law Journal. 40, no. 8: 1344–1345.
  2. ^ Dodd, David L. Stock Watering: The Judicial Valuation of Property for Stock-Issue Purposes. New York: Columbia University Press, 1930.

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