2. MANIPULATIVE CONDUCT
RE: PUBLISHING NON-PUBLIC INFO ON THE NET
there are two issues that seem to come into play when publishing info on the net: trading on public but not disseminated info, and then publishing the same non-public info.
i'm looking at the inside trading laws for info on trading non-public info; and the definitions for "manipulative conduct" with regard to manipulating markets.
this info is from from the following "Charging Order" which it should be noted is not the Final charging order.
Message 20975476
******************************FROM THE ELGINDY CHARGING ORDER
Securities Fraud: First Element - Fraudulent Act: Second Type of Device, Scheme or Artifice to Defraud: Market Manipulation accompanying document be included instead. See Request No. 4.
The government contends that the defendants have committed securities fraud in two ways. First, as I have just gone over, that government alleges that the defendants committed securities fraud by insider trading.
The government also contends that the defendants manipulated or rigged the market for various securities by taking various actions designed to control the prices and trading volume of these securities in a manner that interfered with the natural market forces.
Such market manipulation is also a violation of section 10(b), which I have previously read to you. In order to find the defendants guilty under this theory, you must find the same elements that I previously discussed with you beyond a reasonable doubt. Let me repeat those elements. They are as follows:
First, that the defendant you are considering did any one or more of the following:
(1) employed a device, scheme or artifice to defraud, or
(2) made an untrue statement of a material fact or omitted to state a material fact which made what was said, under the circumstances, misleading, or
(3) engaged in an act, practice or course of business that operated, or would operate, as a fraud or deceit upon a purchaser or seller;
Second, that the defendant you are considering acted willfully, knowingly and with the intent to defraud; and Third, that the defendant you are considering used or caused to be used, any means or instruments of transportation or communication in interstate commerce or the use of the mails in furtherance of the fraudulent conduct.
In the case of market manipulation, the first element -- the device, scheme, or artifice to defraud -- that the government must prove beyond a reasonable doubt is as follows. The government must prove the defendant you are considering, alone or with one or more persons, engaged in manipulative conduct. The term “manipulative” as used in the securities laws connotes conduct that is intentional or willful and is designed to deceive or defraud investors by controlling or artificially affecting the price of securities. Such manipulative conduct distorts legitimate investors’ perceptions of real market conditions because, when investors and prospective investors see trading activity in a security, they are entitled to assume that the prices that they pay and receive are determined by the unimpeded interaction of real supply and real demand. In other words, investors are entitled to assume that the prices and trading volume of securities reflect collective marketplace judgments about the value of those securities. Manipulative conduct frustrates investors’ expectations.
The essential element of manipulation is the deception of investors into believing that prices at which they purchase and sell securities are determined by the natural interplay of supply and demand.
When Congress enacted Section 10 (b) , it intended to prohibit the full range of ingenious devices that might be used to manipulate securities.’5 Consequently, any conduct that is designed to deceive or defraud investors by controlling or artificially affecting the price of securities is prohibited. Congress intended that Section 10(b) prevent fraud, whether it is a garden variety of fraud, or a unique, novel or atypical form of deception. Market manipulation may be accomplished through a variety of means or ways undertaken either alone or in combination. Section 10(b) must be read flexibly, not technically or restrictively.’6
The government alleges that the defendants engaged in a variety of conduct designed to impact artificially the price of stocks, including by making materially false and misleading public statements on the Insidetruth.com website and on the Internet and by coordinating their trading of the stocks of certain companies for the purpose of impacting the price of the stock. For instance, the government alleges that the defendants and others sometimes coordinated to sell their shares all at once to pressure stock prices downward. At other times, they agreed to abstain from short selling when they otherwise would have short sold stock to maintain the stock prices at certain levels, or to slow the speed of a price decline. According to the government, these actions were intended to artificially effect the price of the stock.’7
DISCLAIMER - this is not legal advice and this information may be incomplete or incorrect. these comments are for discussion purposes only. do your own homework. |
