Market Manipulation
Creating false prices or false impressions of trading activity.
What is Market Manipulation?
Prohibited practices include wash trades (buying and selling the same security with no change in ownership), matched orders (colluding to trade back and forth), marking the close (trades timed to move the closing price), pump-and-dump schemes, and spreading false rumors to move a price.
Market Manipulation: a worked example
Two traders repeatedly trading a thin stock between themselves to make it look active are placing matched orders.
More terms in Ethics & Fiduciary Obligations
Form ADV Part 2 Brochure Delivery
Deliver 48 hours before the contract, or at signing with a 5-business-day exit.
Advisory Contract Requirements
Written, specific about fees, no assignment without consent, no waiver of rights.
Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
Performance-Based Fees & Qualified Clients
Allowed only for qualified clients: $1.4M with the adviser or $2.7M net worth (from June 29, 2026).
Prepaid Fees & Financial Requirements
Prepayment over $500, six months ahead, triggers net worth and balance sheet rules.
Custody
Holding, or having authority to obtain, client funds or securities.
Discretionary Authority
Deciding the asset, the amount, or buy versus sell - without asking first.
Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.