Discrimination Features Of Market Manipulation And Anti-manipulation Suggestions In Chinese Stock Market

Market manipulation is one of the three main forms of securities fraud. According to Black’s Law Dictionary, market manipulation is series of behaviors of luring others to buy and sell certain securities by making an active appearance of false or misleading transactions or raising or lowering stock prices. According to the paper in Review of Financial Studies written by Allen&Gale in1992, market manipulation could be divided into three categories:information-based manipulation,action-based manipulation and trade-based manipulation.Market manipulation has a long history.In fact,it appears in the the early17th century.At that time, stock market firstly appeared in Amsterdam,where there appeared market manipulation named Bear raids. People began to really focus on market manipulation because of South Sea Bubble in British. The incident prompted the British Parliament to pass the Bubble Act,which prohibited the companies without a license to issue shares.The existence of market manipulation not only affects the normal stock market volatility and its resource allocation function,but also market manipulation harms the interests of the majority of ordinary investors. Therefore, legislators has developed a harsh punishment about securities fraud such as market manipulation.In1929, the Great Depression breaked out in U.S..As a result, Securities Act was enacted in1933and the Securities Exchange Act was enacted in1934, in order to strengthen regulation of the securities market, while the core of the Securities Exchange Act was provisions of anti-manipulation.In China, Stock Exchange froms its inception just over20years, but market manipulation has been in existence traces of the market, and even more serious than abroad. Therefore, anti-manipulation has become the common aspiration of most shareholders,and the only way to protect the legitimate rights and interests of shareholders and also to regulate China’s securities market.Based on the background, this article mainly makes statistics and analysis about45cases of market manipulation occurred in the history of China’s securities market and gets some discriminantion characteristics of China’s market manipulation,which can be used as discrimination principle of other cases of market manipulation.Therefore,We recommend the establishment of a number of indicators for monitoring anti-manipulation based on the discriminantion characteristics,and we can make a prediction for market manipulation cases,in order to reduce the harms to the securities markets and investors from market manipulation.The innovations of this paper have two main aspects.The first one is the completeness and timeliness of the cases.We have digged and found almost all the cases since the establishment of China’s securities market, a total of45cases,with the time span from1996to December31,2011.The second one is market manipulation empirical discriminantion. We refer the method used in the paper written by Aggarwal&Wu in2003,i.e. the introduction of market manipulation as a dummy variable.And then we investigate the relationship between market manipulation and the rate of return or the rate of turnover,using the stock data in China’s stock market to make the empirical analysis,and at last we get the conclusion that market manipulation has relationships with the rate of return or the rate of turnover.The research methods of the article are literature review method,statistical analysis method, classification&comparative method and empirical research method.The main content and viewpoint of this article is divided into six chapters to elaborate as follows.The first chapter is an introduction. It firstly introduces the background and significance of this study,then describes the framework of this study, research ideas and research methods.The second chapter are the definition and the main forms of market manipulation.Chapter Three describes the literature of market manipulation,from the view of foreign and domestic aspects.Chapter Four analyses the existence and the its deep-seated reasons.The fifth chapter is the main part of the article,which mainly is about the discriminantion characteristics of market manipulation in China’s stock market.Firstly of all,it introduces the market manipulation cases in China’s stock market,and then it does statistical analyses of these cases, including two aspects,i.e.experience analyses and empirical analyses. Experience analyses includes types of manipulation, types of manipulators, equity scale analysis, industry analysis and trading characteristics. Empirical analyses includes of two aspects about the rate of return and the rate of liquidity.The sixth chapter are strategies and recommendations about the anti-manipulation.We mainly talks about the establishment of anti-manipulation monitoring indicators and some suggestions from the point of deep-seated reasons of market manipulation.