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Market manipulation is the collective name for a series of measures that are intended to misrepresent the value of a stock. It is with this wrong value that the manipulator earns his money.
Market manipulation has been around since we’ve been trading stocks, but what has happened lately is that it seems more lively on social media.
– If you stick with it, I have the impression that it has increased. I base this partly on the advice we have received and partly on what I have obtained from Finansinspektionen and also from players on the market, says Jan Leopoldson.
– It seems that something has happened in the last year, adds.
It’s hard to pin down statistically that it has increased precisely in social networks. On the other hand, it is clear that there has been an increase in criminal suspicions received by EBM.
During the period from December 2018 to November 2019, EBM had 34 criminal suspicions regarding market manipulation. For the period from December 2019 to November of this year, the number was 55.
Small savers run the risk of falling into traps when they follow stock advice on social media.
Photo: Piotr Adamowicz / Alamy Stock Photo
For someone to be active on YouTube or Facebook and speak for a certain stake is not the same as market manipulation. You can think about what you want if a stock should be viewed as a purchase security or not. It is the purpose that determines whether it may be a criminal act or not.
– If you spread information for the purpose of influencing the course, that you want the course to change, then you are in the criminal arena. What gets out can be misleading and affect others, Leopoldson says.
– It does not seek to think that the stock is worth buying, its only purpose is to raise the price, he adds.
Typically, manipulators It goes into small businesses where real stock trading is rare. Then they can influence the course with quite small means. When such an action suddenly begins to rush, it may be the result of manipulation.
– Is it a stock that is talked about suddenly, the price begins to move and there is an increase in the negotiation but you do not see any news from the company? Yes, so it’s a warning sign, says Leopoldson.
Is it a stock that is being talked about all of a sudden, the price starts to move, and there is an increase in trading in it, but you don’t see any news from the company? Yes, then it is a warning sign.
There are many ways to manipulate. One may be that handlers buy small items, but at increasing prices. Then the price rises, it is “doped” and at a certain point the criminal sells his stake and takes home the profit.
– Or go in and buy aggressively and in high volumes. Then people hang on and you ditch the stocks, says Leopoldson.
Others place large purchase orders visible, but at the same time, either themselves or through a partner, they have corresponding but hidden sales orders. The result is that the price rises when unsuspecting stock savers buy on rising prices.
In other words easy for the inexperienced to be fooled. Many startups want to enter the stock market at the same time that more and more young people are interested in shared savings.
For Jan Leopoldson, this is a crime that can have far-reaching consequences. People do not dare to trust the courses and in the end they retire to save there.
– If people do not dare to trade, the stock market will deteriorate. And on the stock market are our pension funds and companies that need capital to develop, he says.
-It affects the entire economy, he adds.
Is it difficult to turn market manipulation into evidence?
– If it is. I have to show that their purpose was to influence the course and volumes, responds Jan Leopoldson.
– I have to show a pattern and different contradictions in the pattern. That they don’t act normal and it’s not easy to prove, he adds.
Still, he has managed to get some manipulators killed. Almost three years ago, the Court of Appeal upheld the convictions against two medical students and last fall, two economics students were convicted of the same crime by the Stockholm District Court.
Photo: Thomas Karlsson
The penalty in both cases was one year in prison, but due to their young age, the students received a suspended sentence and a fine. The benefits they had made were lost.
Besides market manipulation There are other risks for the inexperienced who want to boost their personal finances.
– They go to a forum on social networks and have the impression that it is the actions that apply. Then you end up in a club with particularly interested people, says Patrick Siegbahn, financial advisor and founder of Small Savings Guide.
– It can be a thread that deals with a certain action. Those who have bought a stock are almost religiously convinced that it is a good investment and would like to persuade others of it. They sit in a group and pat each other on the back, he adds.
This is not illegal, but it is still dangerous. The same is true of celebrities who invest in a certain action: the celebrity itself makes others endure.
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