Measure 13/12/22

R.A.D. Kartaram fined for infringement of the prohibition of market manipulation

On 1 September 2022, the AFM imposed an administrative fine of €750,000 on Mr Kartaram for infringement of the prohibition of market manipulation pursuant to Article 15 of the Market Abuse Regulation (MAR).

In February and March 2021, Mr Kartaram repeatedly, in quick succession, purchased and resold substantial quantities of shares of a company listed on Euronext Amsterdam. He did this in a manner that caused fluctuations in the price of the share. At the same time, he also traded in contracts for difference (CFDs) against a Cypriot investment firm. CFDs are contracts for trading in price differences of an underlying value. In this case, the underlying value was the price of the share concerned on Euronext Amsterdam. By influencing, on the one hand, the price of the share, Mr Kartaram was able, on the other, to trade profitably in the CFDs.

Cross-product manipulation

This trading practice is known as cross-product manipulation. In cross-product manipulation, the price of one financial instrument is influenced so as to generate profits with another, related financial instrument. This kind of manipulation is brought to the AFM's attention because it has real-time insight into Euronext Amsterdam. In addition, the AFM receives transaction reports from investment firms. These reports relate to the transactions executed in securities listed on Euronext Amsterdam but also to transactions in instruments derived from them such as CFDs that are or can be traded elsewhere. This enables the AFM to identify inappropriate motives for an impactful trade in shares.

Artificial price

Mr Kartaram profited from the favourable sales of his CFDs. At the same time, he interfered with the natural balance of supply and demand on the share market at Euronext Amsterdam. For this was not related to the actual value of the share, but to an ulterior objective. He thereby created an artificial share price, which is seen as market manipulation and is prohibited.

Market manipulation is a serious offence, as it violates the integrity of the market. Market parties must be able to be confident that the price of a share is the result of fair trading practices based on supply and demand. The AFM takes action against breaches of that confidence.

Fine of €750,000

The AFM has imposed a fine of €750,000 on Mr Kartaram. The AFM considers this to be an appropriate amount, taking into account the seriousness of the infringement and the degree of culpability involved in it, the amount of the benefit obtained and the fact that Mr Kartaram did not act as a professional party, among other things.