Market Manipulation on the Securities Market — the Anatomy of the Charge and the Defense
A market manipulation charge is one of the complex categories of securities market regulation: it is broadly framed, while the evidence is usually built on technical and economic analysis. This page explains on which securities and persons the prohibition extends, what counts as manipulation, and what sanctions the National Bank of Georgia may apply — in the defense perspective, where every element becomes contestable.
A manipulation charge unfolds in two layers: first, the scope of the prohibition and its subject matter; second, the signs of manipulation themselves. The defense works on both layers: it often turns out that the conduct lies outside the scope of the prohibition or does not meet the criteria of manipulation.
The Scope of the Prohibition — Which Securities and Persons
The rules established by law extend to the following securities and financial instruments: public securities; securities whose public offering or admission to trading on a stock exchange is requested through a prospectus; government securities; and other securities or financial instruments whose price depends on or is influenced by the foregoing. The prohibition extends to any transaction, order or relationship connected with these securities — whether executed on an exchange or not, both within Georgia and beyond its borders.
An exception is also defined: the rules do not extend to actions of an authorized organ connected with the conduct of monetary or currency policy, the setting of the official exchange rate or the management of state debt. For the defense this is a significant exception — operations performed within the framework of state functions are not subject to the prohibition. It is equally important that the National Bank is entitled to determine actions that are not considered manipulation — these exceptions are an indispensable part of assessing the charge.
What Is Prohibited and What Counts as Manipulation
A person is prohibited from market manipulation and attempted manipulation — a prohibition formulated together with insider trading and unlawful disclosure of information. Manipulation is considered to include, for example: concluding transactions or placing orders that give, or may give, false or misleading signals regarding demand, supply or the price of securities, or bring the price to an abnormal or artificial level; transactions accompanied by the use of fraudulent or misleading devices or otherwise by deception; the dissemination of information that is false, where the disseminating person knew or should have known of its falsity; and the transmission of false information connected with a benchmark, or action aimed at manipulating the benchmark's calculation.
Two details are decisive for the defense: first, manipulation requires the falsity of the signal or the artificiality of the price — a matter of economic analysis; second, in the case of information dissemination, the prosecution must prove that the disseminating person knew or should have known the information was false. Conduct within fair market practice does not merit qualification as manipulation, and the exceptions defined by the National Bank reinforce this direction.
Sanctions and Their Proportionality
Upon detecting a violation the National Bank may, sequentially — or, depending on the seriousness of the violation and the possible risk, non-sequentially — apply sanctions: send a written warning; impose special measures or issue an instruction demanding cessation of the violation; impose a monetary fine in the manner and amount determined by the National Bank; suspend the signing authority of a member of the management body; suspend or cease certain types of operations; require the cancellation or limitation of control by a controlling person; or revoke the license of the activity.
The law also emphasizes proportionality: the sanction imposed must correspond to the seriousness of the violation and the possible risk. For the defense this means that the choice of measure also becomes contestable — from whether the existence of the violation was proven at all, to whether the chosen measure matched the gravity of the violation.
Frequently Asked Questions
To which securities does the prohibition of manipulation extend?
To public securities, securities covered by a prospectus, government securities and instruments dependent on them; the prohibition covers any connected transaction, even off-exchange.
What counts as a sign of manipulation?
Giving false or misleading signals, bringing the price to an artificial level, transactions combined with deception, dissemination of false information and manipulation of a benchmark's calculation.
What sanctions does the National Bank have?
From a warning to license revocation: written warning, measures and instructions, monetary fine, suspension of signing authority, cessation of operations, cancellation of control and license revocation — subject to the proportionality rule.
Where does the defense look for weak points?
In the scope of the prohibition and its exceptions, in the unproven criteria of manipulation, in the person's knowledge and in the proportionality of the sanction.
How We Help on Legal.ge
The Legal.ge team builds the defense against a market manipulation charge with technical and economic precision: we assess the scope of the prohibition and the exceptions, analyze the economic sense of the transactions and the evidence of false signals, and defend your position before the National Bank in both administrative and judicial proceedings. Contact us on Legal.ge — your defense begins with the exact text of the law.