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22 May 2023

It is safe to say that if you run a business or company, there will likely be stocks involved, especially if you are looking to expand.

However, as is the way with some questionable business people, there have been many instances in which stock has been manipulated to the benefit of the business owner.

This is known as stock manipulation and is a fraudulent practice that involves artificially inflating or deflating the price of a stock, often for personal gain. Businesses need to be vigilant in watching for signs of stock manipulation to protect their investments and, of course, to protect their name.

If you or your business have been accused of stock manipulation, you will need the advice of a fraud solicitor, and that is where our team at ABV Solicitors comes in. We have extensive legal knowledge and experience in defending companies and individuals who have been accused of stock manipulation, and we would be happy to take on your case.

But if you run a business, what are some of the signs that stock manipulation may be occurring? Here is a list from our fraud solicitor.

Unusual trading volumes

One of the critical signs of stock manipulation is unusual trading volumes. If there is a sudden spike or drop in trading volumes without any apparent news or market events, it could be a sign that someone is manipulating the stock. If this is visible in your company, then it needs to be investigated, and our fraud solicitor would be more than happy to assist. In fact, if this activity is noticed and is not investigated, you and your business may be penalised heavily further down the line.

Abnormal price movements

Another sign of stock manipulation is abnormal price movements. If the price of a stock suddenly jumps or plummets without any significant news or market events, it could be a sign that someone is manipulating the stock. This is a red flag, and, as a business owner, you need to investigate the underlying cause.

False or misleading information

Stock manipulation often involves false or misleading information being spread about a company. If a business comes across any news or rumours that seem too good to be true or appear to be designed to artificially inflate the price of a stock, it is essential to investigate and verify the information before making any investment decisions.

Trading patterns

Manipulators may use specific trading patterns to manipulate the stock price. For example, they may engage in a technique called “painting the tape,” where they place trades to create the illusion of an increase in trading activity and drive up the price of a stock. This can be detected relatively quickly, and, if you spot such action, you should seek legal advice from a member of our team at ABV Solicitors.

Insider trading

Stock manipulators may also use insider information to change the stock price for their benefit. If there is evidence of insider trading, such as sudden and unusual trades by company executives or board members, it is vital to investigate and report the activity to the relevant authorities.