A Study of Market Price Manipulation in the United States, Saudi Arabia, and Turkey, and the Challenges of Defining the Crime of Manipulation in Iran’s Securities Market Law
Abstract
Price manipulation in stocks has been one of the most controversial issues in capital markets in recent years. Price manipulation is an illegal act aimed at increasing or decreasing the price of securities by creating a misleading appearance in market transactions. It refers to the intentional interference in the supply and demand process of securities. Stock price manipulation significantly affects the decisions made by retail investors, as inexperienced market participants often lack the ability to manage and control the artificial excitement created on the trading screen. Therefore, to prevent manipulation in capital markets, many countries have established legal penalties for such conduct.
In this article you read about:
Manipulation in the Laws and Regulations of Selected Countries
Market Manipulation in the U.S., Saudi Arabia, and Turkey
1.United States:
Market manipulation involves intentional interference in supply and demand, including spreading false information or creating fake trading activity.
Examples: Misleading market appearances, trades without ownership change, withholding supply.
Penalties: Civil (fines, license restrictions), criminal (prison, fines), and compensation to victims.
2.Saudi Arabia:
Manipulation includes fraud, deception, and misleading information that distorts true market prices.
Examples: Pump-and-dump schemes, fake demand through repeated orders, spreading rumors or false data.
Penalties: Warnings, corrective actions, investor compensation, and prison (9 months to 5 years).
3.Turkey:
Manipulation is disrupting price mechanisms and misleading investors to create artificial prices.
Examples: Spreading false information, not disclosing material events, using another’s trading account.
Penalties: The Capital Markets Board can impose sanctions to stabilize the market, as per Article 101.
Challenges in Defining the Crime of Market Manipulation under Iran’s Securities Market Act of 2005
In Iran’s law (Article 46, Clause 3), market manipulation is defined as actions that create misleading market trends, artificial prices, or induce others to trade securities. The mental element is implied by the word “typically”, meaning that if actions foreseeably cause price changes, the crime is committed. However, the law does not explicitly define the specific actions that constitute market manipulation.
This study was conducted at Research Development and Islamic Studies Center of Securities Exchange Organization by Meysam Hamedi in 2022.
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