The statutory prohibition of market manipulation in Zimbabwe

Author:Princess Thembelihle Ncube, Howard Chitimira
Position:Faculty of Law, North West University, South Africa/Faculty of Law, North West University, South Africa, Howard
Pages:130-148
SUMMARY

Market manipulation includes, inter alia, a practice that interferes or attempts to interfere with the free and fair operation of the securities and financial markets by creating an artificial, false or misleading appearance of the price of, or market for, the relevant securities, commodities or financial instruments. Consequently, market manipulation is treated as an offence in many countries,... (see full summary)

 
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The statutory prohibition of market manipulation in Zimbabwe1
PhD. student Princess Thembelihle NCUBE2
Professor Howard CHITIMIRA3
Abstract
Market manipulation includes, inter alia, a practice that interferes or attempts to
interfere with the free and f air operation of the securities and financial markets by creatin g
an artificial, false or mislead ing appearance of th e price of, or market for, the relevant
securities, commodities or financial instruments. Consequently, market manipulation is
treated as an offence in many countries, including Zimbabwe. For instance, market
manipulation is expressly prohibited under th e Securities Act 17 of 2004 (Chapter 24: 25)
as amended (Securities Act 2004). In light of this and for the purposes of this article, the
adequacy of the statutory prohibition on market manipulation in Zimbabwe will be
examined. Accordingly, selected key elements, types, examples, penalties and definitional
aspects of the market manipulation offence under the Securities Act 2004 are discussed.
This is do ne to unpack and examine the adequacy of the Securities Act 2 004 in relation to
the combating of market manipulation in the Zimbabwean financial markets . It is hoped
that the recommendations enumerated in this article will enable policy makers to develop
optimal regulatory measures that promote investor protection and effectively combat
market manipulation in the Zimbabwean financial markets.
Keywords: market manipulation, financial markets, offences, pena lties.
JEL Classification: K22, K23
1. Introduction
Market manipulation is a sub-type of market abuse and it, inter alia,
includes a practice that interferes or attempts to interfere with the free and fair
operation of the securities and financial markets by creating an artificial, false or
misleading appearance of the price of, or market for the relevant securities,
commodities or financial instruments.4 Consequently, market manipulation is
treated as an offence in many countries, including Zimbabwe. For instance, market
manipulation is expressly prohibited under the Securities Act.5 In light of this and
1 This research article was supported in part by the National Research Foundation of South Africa
(NRF), Grant Number: 109232. In this regard, the authors wish to thank the NRF for its valuable
support. The article was also influenced in part by Princess Thembelihle Ncube’s Master of Laws
(LLM) dissertation entitled A Comparative Analysis of the Regulation of Market Manipulation in
Zimbabwe (North West University, 2018) 41-58. Accordingly, she acknowledges the expert input of
Prof Chitimira.
2 Princess Thembelihle Ncube - Faculty of Law, North West Un iversity, South Africa,
princessncube22@gmail.com.
3 Howard Chitimira - Faculty of Law, North West University, South Africa, Howard.Chitimira@nwu.ac.za.
4 Chitimira, 2015, PER Journal, pp. 112-113.
5 17 o f 2004 (Chapter 24: 25 ) as amended (Securities Act 2004), see ss 96 -99 read with ss 100-118;
Chitimira 2015 PER Journal 112-148.
Juridical Tribune Volume 10, Issue 1, March 2020 131
for the purposes of this article, the adequacy of the Zimbabwean statutory
prohibition on market manipulation will be examined. Accordingly, selected key
elements, types, examples, penalties and definitional aspects of the market
manipulation offence under the Securities Act 2004 are discussed. This is done to
unpack and examine the adequacy of the Securities Act 2004 in relation to the
combating of market manipulation in the Zimbabwean financial markets. It is
submitted that financial markets must consistently reflect the genuine prices and
value of the securities and financial instruments.6 Thus, the Zimbabwean financial
markets must be free from market manipulation to enable them to promote and
truly reflect the natural forces of supply and demand for the relevant securities and
financial instruments.7 Robust enforcement of the anti-money laundering laws
could curb market manipulation, market rigging and other illicit activities in the
Zimbabwean financial markets.8 This could also enable the Zimbabwean financial
markets to promote market integrity, investor protection and public investor
confidence.9
The provisions of the Securities Amendment Act10 that were enacted to,
inter alia, enhance the effectiveness of the Securities Exchange Commission of
Zimbabwe (SECZ) and extend its powers to increase investor protection are also
discussed.11 This is done to explore the flaws in the current Zimbabwean anti-
market manipulation statutory regulatory framework. In this regard, possible
measures that could be utilised to enhance the combating of market manipulation in
Zimbabwe are provided. The adequate regulation and enforcement of market
manipulation laws will give rise to fair and efficient financial markets.
Accordingly, it is hoped that the recommendations enumerated in this article will
enable policy makers to develop optimal regulatory measures that promote investor
protection and reduce systematic risk by effectively combating market
manipulation in the Zimbabwean financial markets.12
2. The definitional aspects
2.1 The definition of market abuse
Like the approach in South Africa,13 Namibia, Australia, the United States
of America (USA), the United Kingdom (UK)14 and many others, the term “market
6 Latimer, 1999, Asia Pacific Law Review, pp. 247-251.
7 Ibid, pp. 247-251.
8 Malaysian Securities Commission, Securities Commission Annual Report, 1997, 160; Davis Professional
Investor Rules 10-216.
9 Davis, Professional Investor Rules, pp. 10-216; Chitimira, 2016, Journal of Corporate and Commercial
Law and Practice, pp. 24-25.
10 2 of 2013 (Amendment Act), see s 22.
11 Nhavira, Mudzonga and Mugocha, 2013 Zimbabwe Economic Policy Analysis and Research Unit,
pp. 1-73.
12 Ibid; Fisher et al, The Law of Investor Protection, p. 278-736, for related discussion.
13 Ss 78; 80; 81 & 82 of th e Financial Markets Act 19 of 2012 (Financial Markets Act); see related
comments by Chitimira, 2014 Obiter, pp. 254-271.

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