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Market Manipulation

Market manipulation fraud is a common white collar crime charge and involves allegations of artificially increasing trade volume to increase the price of a security. These types of charges should not be taken lightly, so if you have been accused of market manipulation, it is critical to speak with a white collar crime lawyer who can evaluate your case.

What is Market Manipulation Fraud?

Market manipulation fraud involves the creation of artificial buying pressure for a certain security. This increased trading volume is usually generated by convincing investors to buy shares of the security through the use of deceptive sales practices, although manipulation can involve a number of techniques, all of which affect the supply of a stock. Other common examples include:

  • Spreading misleading information about a company;
  • Rigging quotes, prices, or trades; and
  • Improperly limiting the number of shares that are available to the public.

Generally, once these techniques have been used to affect the supply of a certain stock or bond, the shares are then sold into the inflated market for a profit.

Types of Market Manipulation

There are a variety of ways to manipulate the market. However, the most common include the following:

  • Churning, which occurs when a trader places both buy and sell orders at the same price in an effort to attract other investors and increase the price of the stocks;
  • Painting the Tape or Ramping, which involves a group of traders spreading rumors about a particular stock in order to drive its price up;
  • Wash Trading, which involves the selling and re-buying of the same stock in order to generate activity and so increase the price;
  • Bear Raiding, which occurs when a trader attempts to lower the price of a stock by short selling;
  • Cornering the Market, which means that a trader has purchased enough of a particular kind of stock, commodity, or asset, to gain control of its supply and eventually set its price;
  • Insider Trading, which occurs when traders, who have confidential information about a company, use that knowledge to make a profit or avoid losses by purchasing or selling stocks; and
  • Spoofing, which involves a trader placing large orders for stocks or bonds in order to convince others that the price is changing and then quickly canceling the orders and placing new ones.

Unfortunately, the line between legitimate trading and unlawful market manipulation can be blurry, and as a result, many innocent traders face serious fraud charges. For this reason, it is especially important that those who have been accused of market manipulation, speak with a white collar crime attorney as soon as possible.

Call Today to Schedule a One-on-One Meeting With an Experienced White Collar Crime Lawyer

If you have been accused of unlawfully manipulating the market, there are a number of defenses that could help exonerate you. To learn more about these options, please contact Jeffrey S. Weiner, P.A. Criminal Defense Attorneys in Miami at (305) 670-9919 today. A member of our legal team is eager to address your concerns and evaluate your case.

Resource:

fbi.gov/scams-and-safety/common-fraud-schemes/market-manipulation-pump-and-dump-fraud

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