Is the government controlling the stock market?
Free markets are often conceptualized as having little to no interference from the government. However, in reality governments do step in to stabilize markets, regulate transactions, provide institutional frameworks, and enforce rules around contract law and property rights.
The U.S. Securities and Exchange Commission regulates the stock market, and the SEC's mission is to “protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation." Historically, stock trades likely took place in a physical marketplace.
SEBI is the regulator of stock markets in India. It ensures that securities markets in India work efficiently and transparently. It also protects the interests of all the participants, and none gets any undue advantages.
There is an economic role for government to play in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive.
Insider Trading
It is a type of stock market manipulation insiders of a company like its employees, buy or sell shares of a company based on material information that is not yet known to the public. This gives insiders an unfair advantage over other investors, and it can distort the market and harm investors.
This scheme is usually orchestrated by online message board posters (a.k.a. "Bashers") who make up false or misleading information about the target company in an attempt to get shares for a cheaper price. This activity, in most cases, is conducted by posting libelous posts on multiple public forums.
| Founded | 1992 |
| Owner | Various group of domestic and global financial institutions, public and privately owned entities and individuals |
| Key people | Girish Chandr Chaturvedi (Chairperson) Ashishkumar Chauhan (MD & CEO) |
| Currency | Indian rupee (₹) |
| No. of listings | 2,190 (December 2023) |
Federal laws regulate the stock market. They are designed to ensure fair trading practices and maintain investor confidence. If you are accused of illegal stock market manipulation, you could be charged under these laws and possibly face significant fines and prison time.
The index is maintained by S&P Dow Jones Indices, an entity majority-owned by S&P Global. Its components are selected by a committee. The ten components with the largest dividend yields are commonly referred to as the Dogs of the Dow.
No one, including the company that issued the stock, pockets the money from your declining stock price. The money reflected by changes in stock prices isn't tallied and given to some investor. The changes in price are simply an independent by-product of supply and demand and corresponding investor transactions.
Does the government control all market activity in the US?
Such a mixed economy embraces the free market when it comes to capital use, but it also allows for government intervention for the public good. The U.S. government controls part of the economy with restrictions and licensing requirements, in areas like education, roads, hospital care, and postal delivery.
Command and mixed economies are two different economic systems. The command economy is at one extreme of the economic spectrum while a free market economy is at the other. A mixed economy falls in between the two. A command economy is controlled by the government.
A regulated market (RM) or coordinated market is an idealized system where the government or other organizations oversee the market, control the forces of supply and demand, and to some extent regulate the market actions.
Market manipulation techniques involve spreading false information via online channels that are frequently visited by investors. The barrage of bad information on message boards, when combined with market signals that seem legitimate on the surface, can encourage traders to execute a given trade.
So investors rightfully wonder whether the stock market is rigged. Technically, the answer is of course, no, the stock market is not rigged but there are some real disadvantages that you will need to overcome to be successful small investors.
There are many ways that market manipulation can be carried out, but some common tactics include spreading false or misleading information about a company or its products, creating fake demand for a security by placing large orders that are never executed, or engaging in insider trading.
If the company is generating revenue and has future growth potential, and still the company stocks are plummeting and trading, sometimes as low as its floor, then there's a high chance that the company stocks are being shorted or manipulated.
Penny stocks are extremely volatile and speculative by nature. As most trade on OTC exchanges or via pink sheets, where listing standards are lax, penny stocks are susceptible to manipulation and fraud.
The Market Manipulator: Ivan Boesky
Boesky looked for companies that were takeover targets. He would then buy a stake in those companies on speculation that news of a takeover was going to be announced, then sell the shares after the announcement for a profit.
The richest Americans own the vast majority of the US stock market, according to Fed data. The top 10% of Americans held 93% of all stocks, the highest level ever recorded. Meanwhile, the bottom 50% of Americans held just 1% of all stocks in the third quarter of 2023.
What happens if a stock price goes to zero?
If a stock falls to or close to zero, it means that the company is effectively bankrupt and has no value to shareholders. “A company typically goes to zero when it becomes bankrupt or is technically insolvent, such as Silicon Valley Bank,” says Darren Sissons, partner and portfolio manager at Campbell, Lee & Ross.
But there's one group of investors who charge in to buy when stocks are selling off: the corporate insiders.
Through a buy-sell agreement, it is possible for the majority to compel minority shareholders to sell their shares. This commonly occurs in cases of company-wide buyouts where there is a need for a forced buyout of all or certain shares held by minority shareholders.
The golden rule of stock control is to get the quantity and the frequency of re-stocking activities right, keeping costs as low as possible without compromising profitability and growth.
Generally, a shareholder can refuse to sell their shares, per the terms of the agreement. If there is no agreement or the agreement doesn't have a buyout clause, then the shareholder may be forced to sell their shares.
