Market Manipulation

Market manipulation occurs when brokers, traders, or analysts artificially influence the market to serve their own financial interests at the expense of investors. This deceptive practice can take many forms, with one of the most common schemes being pump and dump manipulation. In these cases, bad actors promote a stock—often from small, microcap companies with a market capitalization of $300 million or less—by spreading false or misleading information to drive up its price. Once the stock price has been inflated, they sell off their holdings for a substantial profit, leaving unsuspecting investors with devalued shares.

If you’ve noticed a pattern where your investments drop sharply in value soon after you purchase them, your broker may have engaged in market manipulation. Malecki Law, a New York-based investment fraud law firm, can conduct a free review of your investments to determine whether your losses were the result of manipulative trading practices.

Fraudulent stock promotions have been a persistent issue in the financial markets, with the internet and social media making them more prevalent than ever. Scammers use mass email campaigns, social media pages, and online message boards to spread misleading or entirely false information about a stock’s potential. They often claim to have insider knowledge or exclusive stock picks that will deliver significant gains, urging investors to buy quickly before the opportunity disappears.

Once enough investors purchase the stock and the price surges—referred to as the pumping phase—the fraudsters sell off their shares, reaping large profits. As a result, the stock price collapses, leaving legitimate investors with heavy losses or stocks that have little to no market value.

If you have been encouraged to buy stocks through unsolicited emails, online promotions, or persistent broker recommendations, you may have fallen victim to market manipulation. Malecki Law’s securities attorneys can evaluate your case to determine if your broker or a third party engaged in fraudulent activity.

Market manipulation is a serious offense that undermines the fairness of the financial system. The Financial Industry Regulatory Authority (FINRA) actively investigates and penalizes brokers and firms involved in these deceptive schemes. FINRA has the authority to bar brokers, expel brokerage firms, and impose significant financial penalties on those who manipulate the market.

• George Johnson Case: FINRA barred broker George Johnson for allegedly manipulating the market price of IceWEB stock. He was accused of recommending that some clients purchase shares at inflated prices while simultaneously advising others to sell.
• Meeting Street Brokerage: FINRA expelled the brokerage firm and barred its broker, Lisa Esposito, after finding that they engaged in stock manipulation involving Relay Capital Corporation, artificially driving up share prices.
• Kirlin Securities: FINRA took action against Kirlin Securities and its co-CEO for allegedly manipulating the market price of Kirlin Holding stock. This involved artificial price increases designed to mislead investors.

If your broker frequently pushes you to buy a particular stock without a clear, justifiable reason, it could be a red flag of potential market manipulation. Malecki Law’s investment fraud attorneys are experienced in detecting these patterns and holding financial professionals accountable for wrongdoing.

If you suspect that you’ve suffered losses due to manipulative trading tactics, acting quickly is critical. Securities fraud claims may be subject to strict statutes of limitations, meaning you have a limited window to seek compensation. These deadlines can vary depending on whether the claim is filed in state or federal court or through FINRA arbitration.

1. Review your transactions – Examine whether your investments follow a pattern of price inflation followed by sudden declines.
2. Preserve evidence – Save emails, trade confirmations, and any communication from your broker regarding your investments.
3. Consult a securities attorney – Contact Malecki Law to analyze your case and explore potential legal remedies.

Malecki Law is a leading securities fraud law firm in New York, representing investors who have been harmed by stock manipulation and deceptive trading practices. If you believe you have been targeted by fraudulent brokers or misleading stock promotions, call (212) 943-1233 or email jenice@maleckilaw.com to schedule a free consultation. Protect your investments, and take action today.