Enforcement of Financial Market Manipulation Laws: An International Comparison of Sanctions

Abstract

Market manipulation has been a significant focus of regulators, the media and others in many countries, with widespread allegations of market manipulation, not just relating to securities, but in relation to interest rates, foreign exchange and commodities. This working paper presents the results of a detailed comparative empirical study of sanctions imposed for trade-based market manipulation in Australia, Canada (Ontario), Hong Kong, Singapore and the United Kingdom (UK). The comparative study is based on a dataset of around 250 sanctions imposed on individuals and companies found or alleged to have contravened market manipulation provisions across the jurisdictions. The study compares the type, magnitude and frequency of sanctions (custodial sentences, banning orders and various pecuniary sanctions) imposed by statutory bodies and the courts for market manipulation in the selected jurisdictions in the ten year period from 1 January 2006 to 31 December 2015. The study also examines pecuniary sanctions imposed relative to illegal profits obtained by the defendants. Key findings include substantial differences between the jurisdictions in the use of sanctions, with much higher use of custodial sentences in Hong Kong, Singapore and Australia, much higher use of banning orders in Ontario and the UK imposing the highest median pecuniary sanctions.