Similar to insider trading, market and trading violations benefit bad actors who manipulate the market. By creating artificial prices for securities different types of market participants unlawfully engage in processes for their own financial gain. The manipulations aim to create a false or misleading appearance of a security or commodity or other financial product which interferes with free and fair operations and cause harm to investors. The fraudulent practices in trading and pricing can take on many forms of market manipulation schemes.
Pump and Dump
When owners of a security spread false information to increase interest in a particular stock and “pump” up the price of the security. Subsequently the owners “dump” their shares, making a profit.
When a group of investors come together in order to push down the price of a stock through concerted short-selling. The tactic, which enables the short-listing, includes conspiring and spreading adverse rumours about a targeted company.
When a trader or investor buys and then sells a financial instrument simultaneously for the purpose of feeding misleading information and creating artificial high trade volumes
in the marketplace, which lead to inflated prices.
Painting the Tape
When market players influence the price of a security by buying and selling it among themselves, hence creating the appearance of substantial trading activity.
When bad actors match their orders, i.e. buy or sell securities knowing that a matching opposite request for the same security will be entered with the intent of creating the impression of high trading volume and artificially inflate the security's price.
Spoofing & Layering
When a trader places an order to buy or sell a stock, bond, or financial asset with no intent of executing, thereby creating an artificial picture of actual demand for or supply of the asset. Layering is a form of spoofing in which the trader places multiple orders
thereby creating a false impression of substantial buying or selling.
Cornering the Market
When investors purchase enough stock, commodity, or other asset in a company to obtain sufficient control in an attempt to manipulate market prices.