| pyramid (def. 8). |
[pir-uh-mid] 
| 1. | Architecture.
|
| 2. | anything of such form. |
| 3. | a number of persons or things arranged or heaped up in this manner: a pyramid of acrobats; a pyramid of boxes. |
| 4. | a system or structure resembling a pyramid, as in hierarchical form. |
| 5. | Geometry. a solid having a polygonal base, and triangular sides that meet in a point. |
| 6. | Crystallography. any form the planes of which intersect all three of the axes. |
| 7. | Anatomy, Zoology. any of various parts or structures of pyramidal form. |
| 8. | Also called pyramid scheme. a scheme that pyramids, as in speculating on the stock exchange or writing a chain letter. |
| 9. | a tree pruned or trained to grow in conical form. |
| 10. | pyramids, (used with a singular verb ) British. a form of pocket billiards for two or four players in which 15 colored balls, initially placed in the form of a triangle, are pocketed with one white cue ball. |
| 11. | to take, or become disposed in, the form of a pyramid. |
| 12. | Stock Exchange. (in speculating on margin) to enlarge one's operations in a series of transactions, as on a continued rise or decline in price, by using profits in transactions not yet closed, and consequently not yet in hand, as margin for additional buying or selling in the next transaction. |
| 13. | to increase gradually, as with the completion of each phase: Our problems are beginning to pyramid. |
| 14. | to arrange in the form of a pyramid. |
| 15. | to raise or increase (costs, wages, etc.) by adding amounts gradually. |
| 16. | to cause to increase at a steady and progressive rate: New overseas markets have pyramided the company's profits. |
| 17. | Stock Exchange. (in speculating on margin) to operate in, or employ in, pyramiding. |
| pyramid scheme n. A fraudulent moneymaking scheme in which people are recruited to make payments to others above them in a hierarchy while expecting to receive payments from people recruited below them. Eventually the number of new recruits fails to sustain the payment structure, and the scheme collapses with most people losing the money they paid in. |
Pyramid Scheme
An illegal investment scam based on a hierarchical setup. New recruits make up the base of the pyramid and provide the funding, or so-called returns, given to the earlier investors/recruits above them.
Investopedia Commentary
A pyramid scheme is initiated by an individual or a company that starts recruiting investors with an offer of guaranteed high returns. As the scheme begins, the earliest investors do receive a high rate of return, but these gains are paid for by new recruits and are not a return on any real investment.
From the day the scam is initiated, a pyramid scheme's liabilities exceed its assets. The only way it can generate wealth is by promising extraordinary returns to new recruits the only way these returns can be paid is by getting additional investors. Invariably these schemes lose steam and the pyramid collapses.
Related Links
What Is A Pyramid Scheme?
The Biggest Stock Scams Of All Time
Investment Scams Tutorial
See also: Bucket Shop, Bucketing, Caveat Emptor, Churning, Front Running, Guilt-Edged Investment, Jitney, Ponzi Scheme
pyramid
pyramid pyr·a·mid (pĭr'ə-mĭd)
n.
A solid figure with a polygonal base and triangular faces that meet at a common point.
A structure or part shaped like a pyramid.