Market manipulation involves interfering with financial markets and is illegal in many regions. It can impact individuals and the financial industry as a whole, and includes practices such as quick buying and selling, short selling, and controlling prices. Manipulation creates an artificial image that can lead to profit for manipulators and losses for others. Suspected manipulation can be investigated and prosecuted by financial regulators and government officials.
Market manipulation is a practice in which people engage in activities that interfere with the normal operations of financial markets. Many nations only have a loose definition for market manipulation because it is sometimes difficult to pinpoint specific manipulative behaviors, but people can still track manipulation activities and see the influence manipulation can have on the market. These practices are illegal in many regions of the world, although it can sometimes be difficult to distinguish between normal activity and market manipulation.
When people manipulate markets, the activity impacts the people involved with the products they manipulate, and also hurts the market as a whole. This makes it a matter not only for individuals, but also for the financial industry in general. When manipulation reduces the value of a stock in a bear run, for example, other people holding the stock lose due to market manipulation. When market manipulation does something like create an inflated market value, the market as a whole suffers and can even drag down the rest of the economy.
A wide range of activities could be considered market manipulation. Often these practices require the cooperation of several people working together because few people have the clout to manipulate the market on their own. Some examples of manipulation practices include quick buying and selling to make it look like there is a lot of activity on a particular product, short selling to lower prices, withholding or adding product supplies to control prices, and “boosting the market.” , in which people try to raise prices.
The problem with market manipulation is that it creates an artificial image that masks the true value of the commodity or group of commodities being manipulated. Manipulators can use this to their advantage to make a profit, while people who are unaware of the manipulation and who make decisions based on available information can lose, sometimes substantially, as a result of the manipulation. In fact, manipulators count on this, often profiting on the losses of others.
Suspected market manipulation may be investigated by financial regulators and other government officials. It can be prosecuted in a variety of different ways, depending on the nation and the nature of the behavior. The defense of activities considered manipulative is often that they were normal, albeit unethical, business activities and that there was no specific intent to be manipulative on the part of the people who benefited.
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