Market manipulation is a type of fraud or deceptive practice that involves intentionally misleading investors in order to manipulate the price of securities. This can be done through various types of market manipulation tactics, including market rumors, pump and dump schemes, front running, excessive trading, marking the close and many others. These tactics are often used by unethical traders in an attempt to manipulate the market and increase their own profits at the expense of others. Because they are often difficult to detect, investors must be vigilant in monitoring their investments and be aware of any signs that may indicate market manipulation is occurring.

While there are no specific SIE exam prep materials specifically designed to help investors spot market manipulation, there are a number of tools and resources available that can help investors become more knowledgeable about this topic. These may include financial publications, online forums and blogs, investment advisory services, and professional training programs. By staying informed about the latest developments in the financial markets and investing wisely, investors can minimize their risk of being victimized by market manipulation schemes.

Market rumors are one of the most common forms of market manipulation. They can take many different forms, such as false or misleading statements about a company that are spread by traders in an effort to drive down the price of its stock. This can be done through various methods, including social media, email and internet forums.

Another common form of market manipulation is the pump and dump scheme, which is often perpetrated by small groups of traders. In this type of scheme, the perpetrators spread false or misleading information about a stock with the goal of driving up its price. Once the stock reaches a certain price tier, the manipulators sell their shares at a profit and leave other investors holding losses.

Front running is another type of market manipulation that involves a trader using privileged information to gain an unfair advantage. This can include things like knowledge of a corporate merger or acquisition, advance notice of earnings reports, and similar insider information. By trading on this privileged information before it is released to the public, the manipulator can make significant profits at the expense of other investors.

Excessive trading is another form of market manipulation that can be difficult to detect. This often involves large volumes of trades being placed by an individual or trading group with the sole intent of artificially impacting the price of a security. Unlike front running, excessive trading does not necessarily involve insider information, so it may be more difficult for regulators to detect and prosecute.

Marking the close and marking the open are other common forms of market manipulation that can involve collusion between traders. In these cases, a group of individuals may work together to inflate or deflate stock prices in order to benefit from subsequent trades. This can involve timing trades to coincide with certain price movements, making it difficult for regulators to track and prosecute.

Finally, backing away and freeriding are two more examples of market manipulation tactics that involve trading practices. In the case of backing away, a trader will abruptly stop buying or selling an asset at a time when the price is expected to rise or fall, thus profiting from the movement in price without having to actually invest in the security. Freeriding, on the other hand, is often used to describe a situation where an investor engages in transactions without having sufficient funds to cover them. This can lead to losses for other investors who are left holding the bag when prices fall.

If you are studying the information for the SIE exam, know that there are many other topics that will be covered on the exam. Thankfully, Achievable offers comprehensive SIE exam prep to prepare you for the SIE Exam. Check out Achievable's website to learn more.