What Is Market Manipulation?
Market manipulation is intentional deception by stock brokers, traders, analyst or bankers in an attempt to misrepresent or alter market prices. Market manipulation is illegal in most countries; in the United States, it's outlawed under the Securities Exchange Act of 1934.
Types of Market Manipulation
Market manipulation comes in many shapes and sizes. The following are a few examples.
- Wash trading – Buying and selling the same security, at the same time and at the exact same price
- Cornering – Excessive purchase of a certain stock, commodity, or other asset in order to gain control and impact the market price
- Insider trading – Buying or selling on non-public information
- Churning - An attempt by a stock broker to increase activity in a client's account to boost commissions by buying and selling orders at the same price. This activity is intended to drive up the price and attract other investors.
- Ramping - Creating trading activities or rumors intended to drive the price up or down