Market abuse

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

• Anti-competitive practices
• Insider trading

References

Further reading

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