A Look into ‘Market Manipulation’ With a Focus on Pump and Dump Schemes and Initial Considerations for Responding to a Regulatory Query

Abstract

Public confidence in the fairness of markets enhances their liquidity and efficiency. Market manipulation harms the integrity of securities and derivatives markets by distorting prices, and creates an artificial appearance of market activity. Market manipulation damages the interests of retail and institutional investors alike by disrupting the smooth functioning of financial markets. This leads to a lack of trust in the fairness of the capital markets, resulting in higher risk premiums and reduced investor participation. This article provides an analytical framework (covering the United States, Switzerland, Singapore and the United Kingdom) for understanding select market manipulation behaviour with a focus on pump and dump schemes; and how to craft a preliminary defence strategy when a query is received from a markets regulator. Some tools for combating crossborder fraud and misconduct that can weaken global markets and undermine investor confidence, have been discussed. corporate governance, comparative law, shareholder primacy