In a properly regulated market, regulators and practitioners all have a role to play to prevent market misconduct from occurring. For example, securities trading companies are required to implement adequate internal controls to avoid fraudulent activities. As investors, we also need to be aware of the traps to avoid, and adopt good habits to reduce the likelihood of falling for common schemes.
This section gives an overview of the more common types of market misconduct, including market manipulation, insider dealing, misappropriation and unauthorised trades and suggests ways that investors can protect themselves from these.
To protect your own interests, avoid trading on rumour or information from the internet only, and carry out thorough homework before investing in a stock so as not to fall into the traps of market manipulation.
To avoid becoming a victim of misappropriation and unauthorised trading, you need to exercise discretion in account authorisation and always keep a close eye on your trading account verifying the information in your transaction documents and statements when you receive them.