Price Manipulation: Prohibited Acts under the Securities Regulation Code

The manipulation of security prices in exchanges, including the local stock exchange, is declared illegal under the Securities Regulation Code. The prohibited conduct includes: (a) painting the tape; (b) marking the close; (c) improper matched orders; (d) wash sales; (e) squeezing the float; (f) hype and dump; and (g) short and distort. 

1. It shall be unlawful for any person acting for himself or through a dealer or broker, directly or indirectly: 

  • i. To create a false or misleading appearance of active trading in any listed security traded in an Exchange or any other trading market: 
  • iii. By entering an order or orders for the purchase or sale of such security with the knowledge that a simultaneous order or orders of substantially the same size, time and price, for the sale or purchase of any such security, has or will be entered by or for the same or different parties; or 

2. It shall be unlawful for any person to make a bid or offer, or deal in securities which has the effect or is likely to have the effect of creating a false or misleading appearance of active trading in any security or with respect to the market for, or the price of, any security. 

3. It shall be unlawful for any Broker, Dealer, Associated Person or salesman of a Broker or Dealer (hereinafter collectively referred to as “registered person”) to make a bid or offer for, or deal in securities, on account of any other person, where the registered person creates, or is aware that the other person creates, or taking into account the circumstances of the order, reasonably suspects that the order creates or will create, a false or misleading appearance of active trading in any security or with respect to the market for, or the price of, any security. 


  • 1. Painting the tape. A series of transactions in securities that are reported publicly to give the impression of activity or price movement in a security.
  • 2. Marking the close. Buying and selling securities at the close of the market in an effort to alter the closing price of the security.
  • 3. Improper matched orders. Transactions where both the buy and sell orders are entered at the same time with the same price and quantity by different but colluding parties.
  • 4. Wash sales. Transactions in which there is no change in beneficial ownership of a security.
  • 5. Squeezing the float. Taking advantage of a shortage of securities in the market by controlling the demand side and exploiting market congestion during such shortages in a way as to create artificial prices.
  • 6. Hype and dump. A buying activity at increasingly higher prices and then selling securities in the market at the higher prices. It is also called “pump and dump”.
  • 7. Short and distort. Selling at lower prices and then buying at such lower prices.
  • 8. Disseminating false or misleading market information through media, including the internet, or any other means to move the price of a security in a direction that is favorable to a position held or a transaction; and 
  • 9. Other types of prohibited conduct and/or manipulative practices which include, among others, the creation of temporary funds for the purpose of engaging in other manipulative practices. 

Obligations imposed on registered persons under this rule apply in respect of all orders, irrespective of the trading system used and whether executed or not. 


Failure to consider the following factors raises a presumption that the transactionls is/are manipulative. 

  • i. Whether the order or execution of the order, would materially alter the market for, and/or the price of, the securities; 
  • ii. The date and time the order is entered or any instructions concerning the date and time of entry of the order; 
  • iii. Whether the person on whose behalf the order is placed, or another person who the Broker Dealer knows to be a related party of that person, may have an interest in creating a false or misleading appearance of active trading in any security or with respect to the market for, or the price of, any security; 
  • iv. Whether the order is accompanied by settlement, delivery or security arrangements which are unusual; 
  • v. Whether the order appears to be part of a series of orders, which when put together with the other orders which appear to make up the series, the order or the series is unusual; and 
  • vi. Whether there appears to be a legitimate commercial reason or basis in placing the order, unrelated to an intention to create a false or misleading appearance of active trading in or with respect to the market for, or price of, any security. 


The Securities and Exchange Commission (SEC) may allow certain acts or transactions that may otherwise be prohibited, having due regard to the public interest and the protection of investors.


The violator is subject to criminal prosecution, with imposable penalty of imprisonment of not less than 7 years nor more than 21 years. If the offender is a corporation, partnership or association or other juridical entity, the penalty may be imposed the officer responsible for the violation. 


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