Manipulation of a Security’s Price or Volume

Under federal law, individuals are liable for fraud when they manipulate markets for securities, swaps, commodities, or futures. The SEC and CFTC define manipulation as “intentional conduct designed to deceive investors by controlling or artificially affecting the [trading] market[s].” Fraudsters use various techniques to affect the supply of or demand for these investment products. Common manipulation schemes include:

• spreading false or misleading information
• improperly limiting the number of publicly available shares
• rigging quotes, prices, or trades to create a false or deceptive demand

Recently, the SEC and CFTC have stepped up their enforcement to prevent these schemes. Under the Dodd-Frank Act’s whistleblower reward programs, whistleblowers are eligible to receive awards for reporting market manipulation. If represented by counsel, a whistleblower may submit a tip anonymously to the SEC and CFTC