Market manipulation refers to purposeful or intentional attempt at interfering with the free and fair
market operations. Market manipulators try to build artificial, deceptive appearances with regard to the price
of, as well as the market for a commodity, security or currency. Market manipulation is illegal and has been
prohibited in the U.S. under Section 9(a) (2) of the Securities Exchange Act of 1934. Australia has also
prohibited the practice of market manipulation under Section s 1041A of the Corporations Act 2001. According to
the Act, transactions which produce an artificial price or try to maintain an artificial price with regard to a
tradable security is termed as market manipulation.
There are several ways in which market manipulation may occur. These are:
Illegal insider trading: Illegal insider trading takes place when a particular trade is influenced by the
privileged few who have access to some corporate information, which has not yet been publicly announced. Since
the information has not yet been made open to several other investors, the few lucky persons use that knowledge
to have an unfair advantage over the remaining market. Making use of nonpublic information for the purpose of
trade goes against the very norm of capital market, which is
transparency.
Pools: Often written agreements are made among a specific group of leaders to entrust the authority of trading
in a particular stock for a fixed time period on a single
manager. Later the profit or losses are distributed amongst
everyone.
Churning: This refers to a trader placing both buying and
selling orders at the same price designed to attract more investors to increase price.
Wash trade: This is an attempt to sell and repurchase the same security for generating increased activity and
price.
Bear raid: This is an effort at pushing the stock price down
through heavy or short selling.
Free charting webinarMon, Nov 18th, 2013 12:00 PM - 1:00 PM ESTDuring the 60 minute session Paul Coghlan, founder of Coghlan Capital, looks at current charts for currencies, precious metals, US indices, highlighting turns and low risk entry points using the Median line analysis methodology. Median line analysis reduces risk and increases the chartists ability to see trend direction, trend
strength and highlight entry and exit levels. Seats are limited so be sure to reserve your spot today. The webinar will be recorded, by signing up you'll receive an email with the webinar replay afterwards. |