Written by: Penny Anthem staff
In light of recent news, of market abuse claims, we thought it relevant to give some specific definitions of what market manipulation is! Using a platform of power to badmouth a security or target a company is only one form of market manipulation. See below for additional examples of ILLEGAL ways people try to influence the marketplace.
“Manipulation is intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security. Manipulation can involve a number of techniques to affect the supply of, or demand for, a stock. They include: spreading false or misleading information about a company; improperly limiting the number of publicly-available shares; or rigging quotes, prices or trades to create a false or deceptive picture of the demand for a security.” (SEC Fast Answers)
Making several different transactions at the end of the day- purchasing a stock at a high price. This gives the illusion that the stock is overall valued at that price, since the opening and closing prices is often quoted.
A Wash trade
Buying and selling the same security to bolster activity in the market place
Coordination of selling a stock short or spreading negative rumors about the company
Painting the Tape
Buying and selling securities amongst an inner circle to create the appearance that the security is highly traded.
Trading securities based on knowledge that’s not yet known to the public
Remember to think for yourself and be skeptical of who is doing what and WHY.