(law): Shares of stock in a business that are inflated by parties colluding with the seller making inflated offers for the property that the stock represents, which are reported to potential sellers as indicative of the value of the stock.
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Origin of watered-stock
Derived from the practice of "watering" livestock before sale, where the seller gives an animal a large quantity of water to drink before a potential buyer weighs the animal to determine its value.