Market abuse may arise in circumstances where financial investors have been unreasonably disadvantaged, directly or indirectly, by others who:
- 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):
- 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;
- 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, and harmonised criminal sanctions.
- Avgouleas EE The mechanics and regulation of market abuse: A legal and economic analysis (2005)
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