Market Abuse

EU and UK law use the term formally, while other countries speak of securities fraud or market misconduct for similar conduct, and the legal tests differ by country. It covers three groups: trading on inside information, improperly passing it on, and actions that give false signals about price or supply or hold prices at artificial levels. Examples range from spoofing and wash trades to spreading false rumours. Intent often matters, though some regimes allow civil action without proof of criminal intent. Firms prevent it through surveillance of trades and communications, staff trading rules, training and suspicious order reporting. In the EU, venues and firms must report suspected cases to the regulator. Surveillance and reporting duties are built around these three behaviours, so a case is usually classified under one of them.

A regulator reviews unusual price jumps in a small-cap share. It finds a director who shared news of a contract win before announcement, a group posting false takeover rumours, and a trader placing large orders that he cancels. The regulator refers each separately: unlawful disclosure, manipulation by false information and manipulation by orders.