Market Manipulation Defense Strategies

Market manipulation is one of several securities-related accusations any corporation or shareholder can face through their investment activities.  Specifically, it is defined as a deliberate attempt to alter the value or price of a security for personal gain.  It can also pertain to similar abuse of products or commodities.

The Securities and Exchange Commission (SEC), and other governmental agencies both at the federal and state levels, issue guidelines and laws which govern how investment transactions are to be executed.  They guard against activity such as market manipulation.  It can become a complex legal tangle for anyone accused of breaching them.

A charge of market manipulation, and subsequent conviction, can result in large fines and even prison time.  It is very important to get good advice upfront regarding your trading strategies, but even more important to have the right attorneys backing you if things go wrong.

Types of Market Manipulation

Market manipulation can take many different forms:

  • Insider trading – exploiting confidential information
  • Cornering the market – controlling the supply of a stock
  • Bear raiding – short selling or heavy selling of a stock
  • Wash trading – selling and repurchasing a security
  • Painting the tape – manipulation of a stock price through rumors or other activities
  • Churning – buying and selling at the same price to attract the attention of investors

All of these actions attempt to achieve the same goal: artificially changing the price of a  security, product, or commodity.  Many market manipulations attempt to raise the price of a stock in order to sell high; others, such as bear raiding, try to lower its price, typically through heavy selling.  Practices such as these can land you in big trouble legally.

Know What Market Manipulation Entails

It’s important to stay within the law and SEC guidelines to avoid accusations of market manipulation.  At the same time, you want to be able to maximize your opportunities and profits when it comes to your company or your personal holdings.  The last thing you or your organization wants to be saddled with is accusations of:

  • Broker fraud
  • Investment fraud
  • Breach of fiduciary duty
  • Etc.

It’s a complex area, spanning both financial practices and the law.  You can be accused of market manipluation based on more than actual trades. Merely making statements deemed misleading and considered an attempt to alter prices can also result in investigation and charges.

Legal Counsel Pertaining to Market Manipulation

Your profit goals and investment activities are critical to your long-term success.  The best practice is to stay knowledgeable on what is appropriate and within your rights to do, and what not to do regarding securities and trading practices.  There are many complicated laws that govern trades and finance, so navigating the intricacies can be difficult.  That’s why it’s important to have effective legal counsel on your side.

At Tencer Sherman, we understand business objectives, corporate finance, and accounting, and we’re here to defend your interests. We help officers and boards of directors comply with San Diego, state, and federal securities laws, and we help clients contest accusations of manipulation and other securities violations.  Our experienced litigators will aggressively fight for your rights in any securities matter.

Being accused of market manipulation can severely damage your company’s reputation and finances.  Be sure to hire experienced litigation lawyers with extensive knowledge of securities law to defend your interests in court.

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