Market Manipulation

Market manipulation is the creation of a fictitious market environment by brokers, traders, and/or analysts to suit only their own profit objectives. “Pump and dump schemes” (otherwise known as “hype and dump manipulation”) refers to the steering of investor toward a stock (typically microcap companies, defined as companies with a market capitalization of $300 million or less) through false or misleading statements. If you notice all your investments declined shortly after you buy them, your broker may have engaged in market manipulation. A New York investment market manipulation law firm like Malecki Law can review the market and your investment(s) in a free consultation. With a stock’s value overstated, the committer of this type of fraud then sells the stock for large profits. The promotion of such schemes is common to the Internet and telemarketing, often perpetuated by paid promoters looking to gain from false hype. Once the stock is entirely sold off (or “dumped”) by the promoter, its worth plummets at the investor’s peril.

As an investor, you should be aware of potential “email stock spamming” as well as similar activity on social media websites. In or around 2013, this method of “pump and dump schemes” became prominent again. Fraudsters engaging in this misconduct send out mass spam emails or post on social media pages to attempt to lure in potential investors, like yourself. The fraudsters will then claim they have inside information on a stock pick for example. If you received similar communications, you may have been a victim of market manipulation. A New York investment market manipulation attorney at Malecki Law can review your investments at no cost. The true intention of these fraudsters is to get people like yourself to invest in the stock at issue, hence “pumping” up the stock price. Once the price is “pumped” due to mass purchases, the fraudsters will then “dump” the shares they own, making profits. Meanwhile, you and many other investors lose money, or are stuck holding shares of a worthless stock.

“Market manipulation constitutes a grave abuse of the integrity of our markets.” FINRA bars brokers and expels brokerage firms from the industry for engaging in market manipulation.

For example, FINRA barred a broker named George Johnson for engaging in a market manipulation scheme that inflated the market price of IceWEB stock. FINRA found that allegedly Johnson recommended some clients to purchase this stock at inflated prices while contemporaneously recommending other clients to sell their shares. If it seems like your broker is continuously encouraging you to invest in a specific security, it may be a sign that she/he is engaging in market manipulation. An investment market manipulation lawyer in New York at Malecki Law is skilled at reviewing these cases. Your broker and firm might be held liable. Another example, FINRA expelled Meeting Street Brokerage and barred its broker Lisa Esposito for allegedly engaging in market manipulation related to Relay Capital Corporation stock, by artificially increasing the share price among other things. FINRA also expelled Kirlin Securities and barred its co-CEO for engaging in market manipulation related to Kirlin Holding stock, by artificially increasing the share price.

Depending on the claim and the state or forum where it is brought, there may be different statutes of limitations or time limits that a customer must bring a claim, even in arbitration. If you suspect broker wrongdoing has contributed to investment losses, you should promptly contact a New York investment market manipulation lawyer at Malecki Law to protect your rights.