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MAR 1.7 Market abuse (manipulating devices)

MAR 1.7.1UK

Table: section 118(6) of the Act

"The fifth [type of behaviour] ... consists of effecting transactions or orders to trade

which employ fictitious devices or any other form of deception or contrivance."
MAR 1.7.1AUK

Table: section 118(6) of the Act as modified by the RAP Regulations

2The fifth [type of behaviour] ... consists of effecting transactions, bids or orders to trade which employ fictitious devices or any other form of deception or contrivance.

Descriptions of behaviour that amount to market abuse (manipulating devices)

MAR 1.7.2E

The following behaviours are, in the opinion of the FSA , market abuse (manipulating devices):

  1. (1)

    taking advantage of occasional or regular access to the traditional or electronic media by voicing an opinion about a qualifying investment (or indirectly about its issuer, if applicable)2 while having previously taken positions on, or submitted bids in relation to,2 that qualifying investment and profiting subsequently from the impact of the opinions voiced on the price of that instrument, without having simultaneously disclosed that conflict of interest to the public in a proper and effective way;

    [Note: Article 1.2 Market Abuse Directive]

  2. (2)

    a transaction or series of transactions that are designed to conceal the ownership of a qualifying investment, so that disclosure requirements are circumvented by the holding of the qualifying investment in the name of a colluding party, such that disclosures are misleading in respect of the true underlying holding. These transactions are often structured so that market risk remains with the seller. This does not include nominee holdings;

  3. (3)

    pump and dump - that is, taking a long position in a qualifying investment and then disseminating misleading positive information about the qualifying investment with a view to increasing its price;

  4. (4)

    trash and cash - that is, taking a short position in a qualifying investment and then disseminating misleading negative information about the qualifying investment, with a view to driving down its price.

Factors to be taken into account in determining whether or not behaviour amounts to market abuse (manipulating devices)

MAR 1.7.3E

In the opinion of the FSA , the following factors are to be taken into account in determining whether or not a fictitious device or other form of deception or contrivance has been used, and are indications that it has:

  1. (1)

    if orders to trade given, bids submitted2 or transactions undertaken in qualifying investments by persons are preceded or followed by dissemination of false or misleading information by the same persons or persons linked to them;

  2. (2)

    if orders to trade are given, bids submitted21 or transactions are undertaken in qualifying investments by persons before or after the same persons or persons linked to them produce or disseminate research or investment recommendations which are erroneous or biased or demonstrably influenced by material interest.

    [Note: Article 5 2003/124/EC]