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Unlawful Marking the Close: A Comprehensive Guide to Its Legal Definition
Definition & meaning
Unlawful marking the close refers to a practice where individuals conduct a series of transactions at the end of the trading day. These transactions create the illusion of active trading in a security or manipulate its price, either raising or lowering it. The intent behind these actions is to influence other investors to buy or sell the security. This practice is considered illegal as it undermines market integrity.
Table of content
Legal use & context
This term is primarily used in the context of securities law and is relevant to financial regulation. It can involve civil and criminal legal proceedings, particularly in cases related to market manipulation. Individuals or entities may face legal consequences for engaging in unlawful marking the close. Users can manage related legal matters by utilizing templates from US Legal Forms, which are crafted by experienced attorneys.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A trader executes multiple buy orders for a stock just before the market closes, creating a spike in its price. Other investors, seeing this activity, may be misled into thinking the stock is in high demand and decide to purchase it, further inflating the price.
Example 2: A group of investors coordinate to sell a stock at the end of the trading day, causing its price to drop. This may prompt other investors to panic sell, exacerbating the decline in value. (hypothetical example)
Relevant laws & statutes
The Securities Exchange Act of 1934 regulates trading practices, including unlawful marking the close. Additionally, case law such as SEC v. Kwak highlights enforcement actions against individuals engaging in this behavior.
Comparison with related terms
Term
Definition
Key Differences
Market Manipulation
Any action taken to artificially influence the price of a security.
Marking the close is a specific type of market manipulation focused on end-of-day trading.
Wash Trading
Buying and selling the same security to create misleading activity.
Wash trading involves trades between the same parties, while marking the close may involve different parties to influence market perception.
Common misunderstandings
What to do if this term applies to you
If you suspect that you or someone you know is involved in unlawful marking the close, it is crucial to seek legal advice immediately. Understanding your rights and obligations can help you navigate the situation effectively. For those looking to address related legal matters, US Legal Forms offers a variety of templates that can assist in managing these issues.
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