Market Manipulation. Search

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A six-step path for a newcomer: what market manipulation is and is not, the six families of technique, one worked example from each family, how to read an enforcement record, how to find things, and a short quiz. Every step links only to pages in this library.

The two articles linked in steps 1 and 4 have stated reading times of 16 minutes between them. The rest is as long as you choose to make it.

1. What market manipulation is, and is not

Market manipulation is conduct that gives other participants a false picture of supply, demand or price, so that they trade on something that is not what it appears to be. Insider trading, front running and churning are often called manipulation but work differently, and the library treats them as related rather than the same.

Read Manipulation, insider trading and fraud: the distinctions that matter, then keep the glossary open for terms you do not recognise.

2. The six families

Each family is defined by what the manipulator controls. In one line each:

A seventh page, Related but distinct, covers conduct that is regularly confused with manipulation. The full technique index lists every technique under its family.

3. One worked technique from each family

For each family, the technique below is the one with the most records in this library. That says where enforcement has been recorded here, not how common the conduct is.

Order-book manipulation

Price manipulation

Price manipulation is trading intended to create an artificial price — one that does not reflect genuine supply and demand — and it is the general charge a regulator brings when the conduct does not fit a more specific named technique.

129 records in the library.

Two ways to charge price manipulationA two-column comparison of the two routes available to a regulator alleging price manipulation. The traditional claim under the Commodity Exchange Act requires proving that an artificial price existed, which obliges the regulator to establish what the price should have been. The fraud-based route under Rule 180.1 requires deception instead, which is a more tractable question, and is why it has become the preferred charge. The traditional claim The fraud-based route· Ability to influence the price· Intent to create an artificial price· An artificial price existed· The accused caused it· Element three is where cases fail· A manipulative or deceptive device· Used in connection with a commodity· Scienter· No artificiality to establish· Now the CFTC’s preferred route

Corners and squeezes

Engineered short squeeze

An engineered short squeeze is deliberately acquiring the tradable supply of a security and withdrawing it from the lending market, so that short sellers who must cover cannot find stock and are forced to buy at the engineer's price.

2 records in the library.

Engineering a short squeezeA participant identifies a security where short interest is large relative to the freely tradable float, buys the float and withdraws shares from the lending market. Short sellers face recalls and margin calls but cannot locate stock to deliver, so they must buy back at any price, and the engineer sells into that forced buying. A squeeze that arises naturally from crowded positioning is not this; the deliberate removal of supply is what makes it a scheme. target identifiedno shares to borrow Find crowded shortshort interest > float Buy the floatand remove the borrow Shorts must coverrecall, margin, or both Price spikesforced buying only Sell into the coverthe profit leg

Information-based manipulation

Pump and dump

A pump and dump is a scheme in which shares are accumulated cheaply, promoted with misleading claims to drive the price up, and then sold into the demand the promotion created, leaving later buyers with the loss.

122 records in the library.

The four phases of a pump and dumpA price line that drifts flat near 42 cents during quiet accumulation, rises steeply to about 2.41 dollars through a promotional campaign, turns over as the promoters sell into the demand they created, and then falls below its starting level. Grey bars behind the line show trading volume, which spikes during promotion and distribution and collapses afterwards. Accumulation Promotion Distribution Collapse 0.35 1.04 1.72 2.41Share price (USD)Trading days

Issuer and structural schemes

Unregistered distributions

An unregistered distribution is selling securities to the public without registration or a valid exemption, which Securities Act Section 5 prohibits regardless of whether anyone was deceived or harmed.

156 records in the library.

An unregistered distributionShares are issued under an exemption from registration, pass to a consultant as purported fees, and an attorney opinion letter is used to remove the transfer restriction. The shares are then sold into the public market. Section 5 of the Securities Act prohibits this regardless of whether anyone was deceived: it is a strict liability provision. restricted stockseeks clearancelegend lifted Issuerissues under exemption Consultanttakes shares as fees Opinion letterrestriction removed Public marketshares sold freely

Benchmark and cross-market manipulation

Rule 105 offering shorts

Rule 105 offering shorts are short sales of a stock in the restricted period before a follow-on offering is priced, followed by a purchase of that stock in the offering, which Regulation M Rule 105 prohibits whatever the trader intended.

85 records in the library.

How a Rule 105 breach is assembledA flow in two rows. A company plans a registered follow-on offering that will be sold on a firm commitment basis. A trader sells the stock short inside the restricted period, which runs at most five business days up to pricing. The offering is priced off the recent market price, which those short sales can press down. The same trader then buys shares in the offering from the underwriter and keeps the discount against the short proceeds. Selling short in the window and then buying in the offering is itself the breach: the rule does not ask whether the trader meant to move the price. thenfeedsallocatedyieldsand so Follow-on plannedregistered, firmcommitment Short salesinside the restrictedperiod Offering pricedoff the recent marketprice Shares boughtfrom the underwriter Discount keptagainst the shortproceeds Rule 105 breachintent is not an element

Crypto-native manipulation

Paid crypto market making

Paid crypto market making is a token issuer hiring a self-described market maker whose actual service is to trade the token with itself or with confederates, manufacturing volume and price support instead of quoting genuine two-sided markets.

8 records in the library.

A token issuer pays for volume that is not thereA token issuer pays a firm that calls itself a market maker. The firm runs a trading bot that buys and sells the token between wallets it controls, so the trades print publicly without any change in who owns the token. The resulting volume looks like organic demand to retail buyers, who buy. The issuer, or its insiders, then benefit from the higher price and from meeting exchange listing thresholds, and the retail buyers are the counterparty to the eventual sales. fee for volumetradesprintslooks organicbuy Token issuerpays the market maker Paid market makerruns the trading bot Self-tradesits own wallets, bothsides Apparent volumeno change in ownership Retail buyersread it as real demand Listing, price supportissuer sells into it

4. How to read an enforcement record

A case page records what a regulator or court published about one matter: who, when, under which statute and how it ended. A status of settled means the matter was resolved by agreement. In many SEC and CFTC settlements the defendant neither admits nor denies the allegations, so a settlement establishes an outcome, not a finding of fact. See neither admit nor deny.

A record is also not a scheme. It is a document written for a legal purpose, and the library is built from those documents. More than half of this library is not market manipulation explains what they contain and leave out. The sources page lists who is collected and where the gaps are.

5. How to find things

Use the explorer to filter records by agency, family and year, the search page to look for a name or phrase, and the glossary for terms. The technique index is the route in by conduct.

6. A closing exercise

Spot the manipulation gives fifteen invented scenarios and asks whether each is manipulation, legitimate trading or something else. Each answer names the technique and the boundary that decides it.