misprice

Fundamental analysis maintains that markets may misprice a security in the short run but that the "correct" price will eventually be reached.

Competitive underwriters would quietly mock the offering, telling potential clients they would not misprice an offering.

"The stock market is rational and prices stocks correctly in the long run, but investors often misprice stocks in the short run," he said.

In fact, markets often misprice risk (e.g. the US mortgage bubble or the European debt crisis) and volatility changes rapidly.

While the fund employed a compliance officer and was audited every year, the internal controls were lax enough to allow Mr. Lipper's portfolio managers to misprice securities for a six-year period.