The notion of manipulation in a financial instrument : part II

The first part of the paper discussed the market manipulation as an economic phenomenon regulated by law. The second part consists in the analysis of Article 39(2) of the Polish Act on Trading in Financial Instruments that provides for a definition of a market manipulation relating to financial instruments. This regulation is a complicated one and contains several unclear terms. Proposals are being made as to how this provision should be constructed together with examples of behaviors that fall into different types of prohibited manipulation. The analysis shows that certain legal definitions of various types of manipulation overlap. Furthermore, some of the definitions can only be understood by referring to the concepts of other types of manipulation (e.g. misleading about the price [Article 39(2)(5)] can be properly interpreted only by referring to definitions of other types of manipulation in Article 39(2)). Although the provision of Article 39 does not accurately express it, such approach appears to be the only acceptable method of interpretation. Those ambiguities result mainly from the way of implementation of the Market Abuse Directive by the Polish legislator. Some types of manipulation included in the Directive only as examples of behaviors falling under the general definition of manipulation are regulated in the Polish law as separate types of manipulation. This is an example of a bad legislative technique. The notion of artificial price provides for another source of controversies (Article 39(2)(2)). At first, it seems to be an objective element of the definition. However, a closer analysis reveals that artificial price should be defined by means of subjective element - the manipulative intent of the trader. Taken as a whole, the definition of manipulation relating to financial instrument contained in Article 39(2) of the Polish Act on Trading in Financial Instruments must be evaluated as inaccurate regulation that result in legal uncertainty.