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Currency News

ISX Cracks Down on Speculators

By Mark DeWeaver.

On December 13 the ISX amended the Iraq Depository Center (IDC) bylaws to prohibit investors from owning the same names in accounts at different brokers. The new rule, which went into effect on January 7, requires anyone holding stocks in the same company through different brokerage accounts to transfer all of their shares to just one of them. The ISX may penalize those who don’t comply by barring them from trading.

This change is evidently intended to crack down on share price manipulation. Ramping share prices is easy to do if you can sell shares back and forth between two accounts. You simply sell the shares to yourself multiple times at higher and higher prices. Then, once ordinary investors start to jump on the bandwagon, you gradually sell off your holding to them and get out at a profit.

It’s easy to see why the ISX should be cracking down on such behavior at this point. With the Asiacell IPO starting this month, ISX officias are understandably focused on maintaining an orderly market. There were also a few names that had been limit up for several days prior to the announcement and fell sharply immediately afterward. In hindsight, these cases look more than a little suspicious.

This rule change won’t end share price manipulation for long, however. In the very short term, speculators may have been caught off balance because they will no longer be able to use some of their brokerage accounts. But it won’t take them long to set up new accounts in different names. Then they will quickly get back to business as usual.

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