Market abuse

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Market abuse may arise in circumstances where financial investors have been unreasonably disadvantaged, directly or indirectly, by others who:[1]

  • have used information which is not publicly available (insider dealing)
  • have distorted the price-setting mechanism of financial instruments
  • have disseminated false or misleading information

Market Abuse is split into two different aspects (Under EU definitions):[1]

  1. Insider dealing: Where a person who has information not available to other investors (e.g. a Director with knowledge of a takeover bid) makes use of that information for personal gain;
  2. Market manipulation: Where a person knowingly gives out false or misleading information (For instance about a company's financial circumstances) in order to influence the price of a share for personal gain.

In 2013/2014, the EU updated its legislation on market abuse,[2] and harmonised criminal sanctions.

See also[edit]

References[edit]

  1. ^ a b EU Legislation Summaries: Market abuse
  2. ^ Willemijn de Jong (21 January 2013). "Tackling financial market abuse in the EU". Retrieved 18 December 2013. 

Further reading[edit]

  • Avgouleas EE The mechanics and regulation of market abuse: A legal and economic analysis (2005)