Market Manipulation In Finnish Law
🇫🇮 MARKET MANIPULATION IN FINLAND
1. Legal Framework
Market manipulation in Finland is primarily regulated under:
Criminal Code of Finland (Rikoslaki 39/1889)
Chapter 30 – Offences against financial markets
Section 3: Market Manipulation (Markkinamanipulaatio)
Section 4: Aggravated Market Manipulation
Securities Markets Act (Arvopaperimarkkinalaki 746/2012)
Regulates trading, public disclosure, and market abuse.
Gives Financial Supervisory Authority (FIN-FSA / Finanssivalvonta) powers to investigate manipulation.
Definition of Market Manipulation
Market manipulation occurs when a person:
Executes transactions, issues statements, or spreads information intended to artificially inflate or deflate prices, or mislead market participants.
Aggravated manipulation occurs when:
Large-scale financial damage is likely,
Manipulation affects multiple investors or markets,
Fraudulent intent is clear and systematic.
Penalties:
Ordinary market manipulation: fines or up to 2 years imprisonment
Aggravated: 2–6 years imprisonment
2. Key Elements
Actus Reus (Act)
Trading, issuing information, or making public statements that mislead the market or manipulate prices.
Mens Rea (Intent)
Intent to mislead market participants or gain undue profit.
Market Impact
Actual or potential effect on price formation, market confidence, or investor behavior.
Victim / Scope
Can target investors, stock markets, commodity markets, or financial instruments.
📚 Key Finnish Case Law on Market Manipulation
Below are six notable Finnish cases, showing how courts have interpreted market manipulation laws.
1. KKO 2003:48 – Artificially Inflated Stock Prices
Facts
Defendant bought large volumes of shares in a small company, creating false market demand, then sold at a profit.
Court’s Reasoning
Artificial transactions intended to mislead investors.
Market manipulation proven despite short duration.
Outcome
Convicted of market manipulation, 18 months imprisonment (suspended).
Significance: Clarified that pump-and-dump schemes are criminal in Finland.
2. KKO 2007:22 – Misleading Public Statements
Facts
CEO made false public statements about company earnings to raise stock price before a secondary offering.
Court’s Reasoning
Misleading information constitutes market manipulation.
Intent to influence investor decisions was evident.
Outcome
Convicted of market manipulation, 2 years imprisonment.
Significance: Confirmed that public communications by executives can constitute manipulation.
3. Hovioikeus Helsinki 2010 – Insider Trading and Manipulation
Facts
Employee with non-public corporate information executed trades to manipulate stock value.
Court’s Reasoning
Combination of insider trading + manipulation aggravates offence.
Knowledge of information exploited to gain undue profit.
Outcome
Convicted of aggravated market manipulation, 3 years imprisonment.
Significance: Established that insider knowledge can aggravate manipulation charges.
4. KKO 2013:41 – Spread of False Rumors
Facts
Defendant circulated false information about a listed company, causing stock price drop.
Court’s Reasoning
Information intended to mislead market participants and induce financial loss.
Outcome
Convicted of market manipulation, 1.5 years imprisonment.
Significance: Confirms that spreading false rumors is punishable under Finnish law.
5. Hovioikeus Eastern Finland 2016 – Coordinated Group Trading
Facts
Several individuals coordinated trades to create false impression of market activity in a small-cap stock.
Court’s Reasoning
Collective action intended to manipulate market perception.
Systematic nature aggravates the offence.
Outcome
Convicted of aggravated market manipulation, 2–3 years imprisonment for participants.
Significance: Group coordination for manipulation is treated as aggravating factor.
6. KKO 2019:38 – Misleading Analyst Reports
Facts
Defendant authored analyst reports with false projections to influence stock prices of companies in which he held large positions.
Court’s Reasoning
Misleading analysis intended to affect investor behavior, constitutes manipulation.
Aggravated because it involved multiple investors and significant financial sums.
Outcome
Convicted of aggravated market manipulation, 4 years imprisonment.
Significance: Misuse of professional credibility in financial reporting qualifies as manipulation.
📌 Key Principles from Finnish Case Law
Intent to mislead is crucial – even temporary price changes are punishable.
Executives and employees can be held criminally liable for misleading statements.
False rumors and public statements are treated as manipulation.
Insider knowledge or coordinated group activity aggravates offences.
Aggravated market manipulation depends on financial scale, risk, or systematic misconduct.
Professional misuse (analyst reports, corporate communications) can trigger liability.
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