How does Funderbeam avoid market manipulation?
As a Regulated Market Operator (RMO), our Marketplace rules do require all participants to follow important regulations aimed to protect the community. Funderbeam wants to help any community members understand what is market manipulation to ensure that those unaware do not accidentally act improperly.
It is important that you are aware of regulatory requirements in the environment you are actively participating in.
What is market manipulation?
Market manipulation is typically synonymous with situations where people either:
- Place orders without any intention of executing those orders, in order to influence the price or volume of the securities in the Marketplace.
- Spread false information or rumours to hype up or push down the price or liquidity of the securities in the Marketplace.
- Act on material price-sensitive non-public information for their own benefit, ahead of such disclosure to the general public.
These examples give an overview that manipulation involves falsely misleading investors or acting on information that is unknown to the general public.
Additionally, Funderbeam looks to prevent any potential market manipulation either as a buyer or seller.
To ensure a fair market all trades are subject to;
- Perform regular checks for suspicious activity or unusual trends
- Directors and/or “Insiders” trades are recorded and reviewed
- Pricing corridor is in place to prevent unnatural pricing or “anchoring” to inflate/decrease value
All of these factors are in place to protect our investors and if there is anything that might concern you while reviewing the marketplace please contact us as soon as possible.
Below are two summarised examples from the Monetary Authority of Singapore where they convicted people for breaching the above.
1. MAS Imposes Civil Penalty of $336,000 on Mr Tham Wai Mun Raphael for Insider Trading (June 2019)
Mr Tham used his position as Non-Executive Vice Chairman to act on material price-sensitive information to cut losses on his holdings of the company’s investments. The case was referred by FCA to MAS for further investigations.
Mr Tham paid MAS a civil penalty of $336,000 without court action. The penalty represented 2.5 times the losses that Mr Tham had avoided from the sale of his shares. Mr Tham also gave MAS a voluntary undertaking not to be a company director or be involved in the management of a company for a period of two years with effect from 5 June 2019.
2. Court Convicts Three Individuals for Insider Trading and Orders Forfeiture of Criminal Proceeds (July 2019)
Mr Leong Chee Wai, Mr E Seck Peng Simon and Mr Toh Chew Leong were today convicted and sentenced to 36 months, 30 months and 20 months imprisonment respectively. They were charged with a total of 333 counts of insider trading offences. The individuals had carried out a front-running arrangement over a period of 7 years resulting in profits of S$8.07 million. This is the first case of front-running prosecuted as an insider trading offence in Singapore, which carries a more severe penalty.
Using inside information, the individuals conspired to place their own orders ahead of a company’s large orders which had significant price impact on the market due to the large quantity involved. The investigations conducted by MAS arose from a referral by the Singapore Exchange Securities Trading Ltd (SGX-ST). In the course of MAS’ investigations, the assistance of The Australian Securities and Investments Commission was also sought and given.
️ Warning: Investing involves risk, before continuing you should educate yourself on the risks associated with early stage investing. If needed, we advise you to seek professional investment advice.