Market abuse usually arises in circumstances where investors are disadvantaged due to unlawful behaviour. Which of the following best describes its criminal status?

• A. Market abuse is always civil
• B. Insider dealing only
• C. Insider dealing and market manipulation
• D. None of the above

Answer: (C)

Market abuse involves actions that distort price formation and disadvantage investors, and many jurisdictions treat these acts as criminal offenses. The best description is that it includes both insider dealing and market manipulation, since trading on material non-public information and actions aimed at misleading or creating a false impression about a security’s price or volume are both criminal offenses under financial services laws. It isn’t true that market abuse is always civil, nor that it only covers insider dealing, and there are indeed criminal dimensions to these behaviors.