Lesson 4 of 5 · All lessons in this module
This lesson is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 4 of 5 · 15 min
Standard II(B) cases: rumours, trades and intent
Manipulation is a false picture of price or volume created on purpose: ask whether the information was false or misleading, or the trades were designed to mislead, and whether the member knew or should have known the effect.
In short
- Information-based: false or misleading information used to induce trading, such as rumours, hyped forecasts and promotion disguised as independent analysis.
- Transaction-based: trades that give a false impression of activity or price, or a dominant position used to push a related derivative or the underlying; the question is whether you knew or should have known the actions could affect price.
- Intent decides. Legitimate strategies based on perceived inefficiencies are not barred, and honest research is not manipulation even when it moves a price.
- Benefit to your clients or fund holders is never a defence, and profit is not what makes a rumour a violation.
- Many II(B) vignettes also breach V(A) (no reasonable basis), VI(A) (undisclosed compensation) or III(B) (selective release).
Unlock this lesson free for 7 days
Create a free account to get 7 days free: every lesson, video and flashcard, and the question bank. No card needed.