Manipulating Markets: Examples of Market Manipulation in the UK

barryauthor2023/11/15 21:22:59

Market manipulation is a practice that involves the manipulation of financial markets for personal gain. This can include artificially increasing or decreasing the price of a security, asset, or commodity to create a false impression of value. In the United Kingdom, market manipulation is a serious issue that has been responsible for various financial scandals and market crashes. This article will explore several examples of market manipulation in the UK and the consequences of these practices.

1. Lynda Sharmans "Pipe Plan"

Lynda Sharmans "Pipe Plan" was a controversial scheme in 2008 to manipulate the oil market in the UK. Sharma, the CEO of Tullow Oil, allegedly planned to create a false impression of oil prices by organizing a group of investors to buy and sell oil contracts at specific prices. This plan was intended to artificially increase oil prices and benefit Sharma and her investors. However, the plan was exposed and Sharma was subsequently arrested and charged with market manipulation.

2. LIBOR Scandal

The London Interbank Offered Rate (LIBOR) is the benchmark interest rate for unsecured loans between major British banks. In 2012, it was revealed that several banks had been manipulating LIBOR rates to improve their financial results and profits. This scandal resulted in numerous criminal charges, fines, and sanctions against the banks involved, as well as a significant loss of trust in the financial system.

3. FX Rigging

Foreign exchange (FX) trading is a significant part of the global financial market, with a daily volume of over $5.3 trillion. In 2013, it was revealed that several major banks had been rigging the FX market for years, artificially increasing or decreasing currency exchange rates to benefit their clients and themselves. This scandal resulted in numerous criminal charges, fines, and sanctions against the banks involved, as well as a significant loss of trust in the financial system.

4. Forex Market Manipulation by Smaller Companies

In addition to the major banks, smaller companies have also been accused of manipulating the forex market. For example, in 2017, the UK's Financial Conduct Authority (FCA) fined a small UK-based firm $50,000 for manipulating the forex market. This case highlights the fact that even smaller companies can engage in market manipulation, which can have severe consequences for investors and the overall stability of the financial system.

Market manipulation is a serious issue in the UK and worldwide, with numerous examples of financial scandals and market crashes resulting from this practice. The UK's Financial Conduct Authority has taken steps to crackdown on market manipulation, but more needs to be done to ensure the integrity of the financial system and the protection of investors. Policymakers, regulators, and financial institutions must work together to prevent market manipulation and promote fair and transparent financial markets.