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Simple English definitions for legal terms
market manipulation
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A quick definition of market manipulation:
Market manipulation is when someone tries to make it look like a lot of people are buying or selling a stock, in order to make the price go up or down. This is illegal and against the rules of the Securities Exchange Act of 1934. It's like cheating in a game, and can hurt other people who are trying to invest in the stock market.
A more thorough explanation:
Market manipulation is the illegal practice of artificially raising or lowering the price of a security by creating the illusion of active trading. This is done to deceive investors and make a profit.
For example, a group of investors may collude to buy a large number of shares of a particular stock, driving up the price. They may then sell their shares at the inflated price, making a profit while leaving other investors with losses.
Market manipulation is prohibited by the Securities Exchange Act of 1934, which makes it illegal to engage in any practice that deceives investors or manipulates the market. This law is designed to protect investors and ensure that the stock market operates fairly and transparently.