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66 Emory L.J. 1253 (2016-2017)
The New Market Manipulation

handle is hein.journals/emlj66 and id is 1290 raw text is: 










THE   NEW MARKET MANIPULATION


                                Tom  C. W Lin*

                                  ABSTRACT

    Markets face a new and daunting  mode ofmanipulation.  With this new mode
ofmarket  manipulation, millions of dollars can vanish in seconds, rogue actors
can  halt the trading of billion-dollar companies, and trillion-dollar financial
markets  can be distorted with a simple click or afew lines ofcode. Every investor
and  institution is at risk. his is the new precarious reality of our financial
markets.

    This Article is about our ominousfinancial reality, this dangerous new mode
of market  manipulation, and the need for pragmatic policies to better address
the rising threats to manipulate our financial markets. To start, the Article offers
an overview  about the recent rise and regulation ofnewfinancial technology. It
begins with a close examination of The Flash Crash of2010  and the publication
of  Flash Boys   by Michael  Lewis.  Next,  the Article surveys  the changing
landscape   of market   manipulation.  It identifies traditional manipulation
methods  like cornering, front running, and pumping-and-dumping, as well as
new  manipulation  methods  like spoofing, pinging, and mass misinformation. It
explains  how  new   cybernetic market  manipulation   schemes  that leverage
modern   technologies  like electronic networks, social media,  and  artificial
intelligence are  more  harmful  than  traditional schemes.  The Article  then
grapples  with why  this new mode of market  manipulation will present critical
challenges for regulators. Finally, it recommends three pragmatic proposals for
combating   the new  threats of cybernetic market manipulation  by  improving
intermediary   integrity, enhancing financial  cybersecurity, and  simplifying
investment strategies. Ultimately, this Article provides an original and improved
framework   for thinking  and  acting anew  about  market  regulation, market
operations, and market  manipulation.

    * Associate Professor of Law, Temple University Beasley School of Law. Many thanks to Jim Fanto, Jill
Fisch, Joan Heminway, Duncan Hollis, Kristin Johnson, Wulf Kaal, Donald Langevoort, Gregory Mandel, Carla
Reyes, Paolo Saguato, Gregory Scopino, Andrew Verstein, Harwell Wells, and conference and workshop
participants at Brooklyn Law School, Murphy Institute at Tulane University, Seton Hall University School of
Law, and the 2016 National Business Law Scholars Conference for helpful comments, exchanges, and insights.
I am grateful to Thomas Helbig, Emily Litka, Leslie Minora, and George Tsoflias for their extraordinary research
assistance.

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