Overview of the Federal Prohibition on Market Abuse in the United States of America

Abstract

The United States of America (the US) has a relatively broad and adequate market abuse prohibition in place at a federal level. For instance, insider trading, market manipulation and other related illicit activities such as tipping and short selling are regulated at a federal level in the US. This approach has to date relatively culminated in greater deterrence, compliance and curbing of market abuse practices across the US financial markets. It is against this background that this article provides a brief overview analysis of the regulation and enforcement of the market abuse prohibition in the US at a federal level. This is done by, first, discussing the development, prohibition and the available penalties and remedies for insider trading. Secondly, a similar analysis will be done in respect of market manipulation. Moreover and where necessary, relevant federal provisions and cases from the US will be contrasted with similar provisions and cases in South Africa in order to recommend, where appropriate, possible anti-market abuse measures that could be employed to enhance the combating of market abuse practices in South Africa.

DOI: 10.5901/mjss.2014.v5n7p119