What is the definition of manipulative trading?

• A. Attempts to control the price of a security through trading
• B. Buying and selling securities without a defined strategy
• C. Trading based on historical market trends
• D. Executing orders based on insider information

Answer: (A)

Manipulative trading is defined as attempts to control the price of a security through trading. This practice often involves actions intended to artificially inflate or deflate the price of a security, influencing market dynamics to benefit the manipulator. It disrupts fair market operations and can mislead other investors, resulting in a distorted view of supply and demand.

The focus on this definition emphasizes the unethical nature of manipulative trading, which is not merely about buying or selling securities but involves intentional strategy to deceive or mislead market participants about the true value of a security. In contrast, other choices reflect different aspects of trading behavior that lack this manipulative intent, such as trading without strategy or relying on historical data.