Market manipulation is conduct that creates or maintains an artificial price for financial products. ASIC investigates suspected manipulation under the Corporations Act using surveillance tools, notices, and compulsory examinations.
ASIC treats suspected market manipulation as a priority because it affects market fairness, price integrity and confidence in Australia’s financial markets. Many clients only learn of an investigation when they receive an ASIC s 19 compulsory examination notice, a Notice to Produce, or formal correspondence from the Markets Enforcement team.
This page explains the process clearly for anyone suddenly dealing with ASIC.
What Is Market Manipulation Under Australian Law?
Market manipulation occurs when a person engages in conduct that:
- creates a false or misleading appearance of active trading,
- artificially affects the market price,
- manipulates supply, demand or valuation, or
- interferes with the natural market forces of buyers and sellers.
The relevant offences come from the Corporations Act 2001 (Cth), including:
- s 1041A – False trading and market rigging
- s 1041B – Artificial price creation
- s 1041C – Manipulation of assets
- s 1041E – False or misleading statements
- s 1041F – Inducing persons to trade
These offences carry significant criminal and civil penalties.
How ASIC Detects Market Manipulation
ASIC uses sophisticated systems including:
- TRADE (market surveillance algorithm)
- direct ASX trading feeds
- cross-market pattern recognition
- phone and email metadata
- referrals from AUSTRAC, AFP and overseas regulators
ASIC’s surveillance focuses on patterns such as:
- wash trades
- matched orders
- ramping or marking the close
- insider-based trading activity
- volume spikes before announcements
- layering and spoofing
Any suspicious pattern may trigger an internal review.
How a Market Manipulation Investigation Begins
An investigation may start from:
- an ASX suspicious trading report
- unusual price or volume movements
- complaints from a broker or financial institution
- “front running” or orders ahead of clients
- coordinated trading patterns among accounts
- whistleblower information
You may first learn of it when ASIC sends:
- a Regulation 4 Form 1 Notice (compulsory examination),
- a Notice to Produce, or
- a voluntary interview invitation.
ASIC Notices Issued in Market Manipulation Matters
- s 19 Examination Notice
Requires a person to attend ASIC, take an oath, and answer questions.
- s 30 Notice to Produce Books
Seeks trading records, communication logs, emails, or financial data.
- s 912C AFSL Breach Reporting (if a licensee is involved)
May involve parallel inquiries into systems and compliance
What Happens in a Compulsory Examination
Examinations are private under s 22 of the ASIC Act.
You must:
- swear an oath or affirmation
- answer all relevant questions
- comply with ASIC directions
- avoid giving false or misleading information
- request a transcript if you want one
This is ASIC’s most powerful information-gathering tool.
Possible Outcomes of a Market Manipulation Investigation
ASIC may:
- take no further action
- issue a warning or administrative remedy
- negotiate an enforceable undertaking
- commence civil penalty proceedings
- refer the matter to the CDPP for criminal charges
Market manipulation offences carry maximum penalties of up to 10 years imprisonment depending on the conduct.
FAQs — Market Manipulation Investigation
What is an example of market manipulation?
Wash trades, ramping the close, matched orders and artificial price creation.
Can ASIC look at my phone or emails?
ASIC can obtain communication records through Notices to Produce and cross-agency cooperation.
Is a s 19 examination a criminal charge?
No. It is an investigative tool.
Can answers in an examination be used against me?
If you say “privilege” before answering, your answer is generally protected.
Are you being investigated by ASIC? Read on to:
