Also known as: manipulate · manipulates · manipulated · manipulating · manipulations · market manipulation
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
Physical handling of an object during a lawful Terry patdown that exceeds the limited touching needed to determine whether the object is a weapon. Such excess manipulation converts the encounter into an unlawful search and requires suppression of any resulting seizure.
Physical handling of an object during a lawful Terry patdown that exceeds the limited touching needed to determine whether the object is a weapon. Such excess manipulation converts the encounter into an unlawful search and requires suppression of any resulting seizure.
During a lawful traffic stop, Officer Ramirez patted down Michael Miller's jacket and felt a small, hard cylinder. Ramirez then squeezed and rotated the object repeatedly to identify its contents rather than stopping once he ruled out a weapon. The additional manipulation exceeded Terry limits, so the cylinder and its contents were suppressed.
Deceptive practices such as wash sales, matched orders, or rigged prices that are intended to mislead investors by artificially affecting market activity. The term functions as a statutory term of art under Section 10(b) and does not reach breaches of fiduciary duty absent such deception.
Santa Fe Industries directors approved a short-form merger that cashed out minority shareholders at a low price without any false statement or nondisclosure. Minority shareholders sued under Rule 10b-5 alleging breach of fiduciary duty. Because the transaction involved no deception or market manipulation, the claim failed.
Deceptive practices such as wash sales, matched orders, or rigged prices that are intended to mislead investors by artificially affecting market activity. The term functions as a statutory term of art under Section 10(b) and does not reach breaches of fiduciary duty absent such deception.
Each sense below has its own examples, sources, and questions.
Hertz Corporation moved its executive offices to New Jersey while keeping most operations in California. Plaintiffs argued the move was a sham to create diversity jurisdiction. The Court rejected the claim, holding that only genuine manipulation of the actual direction center would defeat the statutory test.
An officer may touch an object only to the extent necessary to determine whether it is a weapon. Any further squeezing, rotating, or probing that reveals contraband exceeds the limited scope of a weapons search and renders the seizure invalid.
A move constitutes manipulation only when the claimed nerve center is a sham such as a mail drop or annual retreat. Courts then disregard the nominal location and treat the place of actual direction and control as the principal place of business.
Basic Inc. made repeated public statements denying merger talks while negotiations were underway. Shareholders who sold during that period sued, claiming the statements artificially depressed the stock price. The Court held that material misrepresentations of this type constitute the manipulation Section 10(b) targets.
J. I. Case distributed a proxy statement seeking approval of a merger while concealing prior unlawful market manipulation of the target stock. A shareholder sued for violation of the proxy rules. The Court recognized an implied private right of action to remedy the deception.
Texas Gulf Sulphur executives purchased company stock after learning of a major mineral discovery but before any public announcement. The SEC charged that the undisclosed purchases constituted manipulative conduct under Rule 10b-5. The court agreed that trading on material nonpublic information distorts market prices.
No. The statute prohibits only manipulative or deceptive devices. A breach of fiduciary duty by majority shareholders that involves no misrepresentation or market manipulation falls outside the reach of Rule 10b-5.
Manipulation requires affirmative conduct intended to mislead the market, such as wash sales or rigged prices. Mere silence or failure to disclose, without more, does not satisfy the statutory element unless accompanied by deceptive acts.
…that in this case, there is no evidence that petitioner Basic's officials made the troublesome misstatements for the purpose of manipulating stock prices, or with any intent to engage in underhanded trading of Basic stock. Indeed, during the class period, petitioners do not appear to have purchased or sold any Basic stock…