RIGGING THE is a terni popularly used to signify an operation on the Stock Exchange for the purpose of raising shares to a fictitious value in the market. The parties to the operation hold, as a rule, the great majority of the shares issued by a particular company. They arrange with a jobber on the exchange to constitute the " market," and then instruct one or more brokers to sell a quantity of the shares and another one or two to buy. The price at which these sales and purchases are effected starts at an agreed figure and then continually rises, so that the public, who watch the lists of shares dealt in on the exchange, will see that the price is steadily rising, and may assume that there is a bona fide market in them. The public having duly seen and assumed these matters respectively, a speculative portion of it begins to make bona .fide purchases of the shares, believing that they represent a good and increasingly valuable investment. As prices continue to rise the speculative portion of the public tends to extend, with the result that, in a successful rig, all the shares eventually pass into the hands of the public, and the operators of the rig have been thus enabled to unburden themselves at usually a very considerable profit. It is by means of a rig that the promoters of a company very frequently get rid of the large quantity of vendors' shares with which they are usually encum bered upon its flotation. And now, since the latest Companies Act, it is a not uncommon practice for a company to be floated without issuing a pro spectus, the promoters relying upon a rig to attract the public both as purchasers of their vendors' shares and, in effect, as subscribers of the company's working capital. A rig is essentially a fictitious operation, and it depends for its existence and maintenance upon the continued efforts of its operators. When, however, the latter have " unloaded " their shares they have no further interest in the price and marketability of them. Consequently tbey cease to support the rig, and the prices of the shares forthwith fall. If the company has really no merits of its own the price of the shares may fall from some high premium to a few pence, and even at this figure it will be found that there is no market for them. The shares are practically so much waste paper. Except in respect of known companies of standing—and even then, perhaps, not in the case of new issues of shares—the " lay " public should place no faith in, and not be influenced by only the records of dealings as they appear in the various published lists.
A statement suggesting that a person is concerned in " rigging the market " is a scandalous one, since it makes a charge of dishonesty. And this is so, " because rigging the market '—that is, going into the market pretending to buy shares by a person whom you put forward to buy them, who is not really buying them, but only pretending to buy them, in order that they inay be quoted in the public papers as bearing a premium, which premium is never paid—is one of the most dishonest practices to which men can possibly resort. There is a class
of people who think it is a legitimate mode of making money ; but if they would only examine it for a moment they would see that a more abominable fraud, and one more difficult of detection, cannot be found. The statement is that . . . is forming a syndicate—I know what it means from having had so many of these cases before me; it is a body of men of which one is to buy and another to sell, so as to give an appearance of great demand for certain shares when in reality there is no demand for them at all, thus defrauding the public " (Vice Chancellor Malins in Rubery v. Grant).
It is an illegal transaction for two or more persons to agree between them selves to purchase shares in a company in order to induce persons who might afterwards purchase shares in that company to believe, contrary to the fact, that there was a bonii ,fide market for its shares, and that the shares were at a real premium. Such was the decision in Scott v. Brown, wherein it was also laid down that such an agreement could be made the subject of an indictment for con spiracy. No action can be maintained in respect of such an agreement or purchase of shares. Lord-Justice Lindley said, in his judgment : "I am quite aware that what the plaintiff has done is very commonly done ; it is done every day. But this is immaterial. Picking pockets and various forms of cheating are common enough, and are nevertheless illegal." is a riot where three or more persons, assembled together, actually commit some act in a violent or tumultuous manner, either with or without a common cause or quarrel. It should be distinguished from an unlawful ASSEMBLY, which does not amount to a riot, in that there the persons disperse without having committed the intended act of violence. The Riot Act, 1716, makes it a felony if any tzexlve persons are unlawfully assembled to the disturbance of the peace, and if, after any one magistrate, sherifF, under-sheriff, or mayor of a town, has commanded them to disperse, they continue together for one hour. The command must be made in the very words of the following proclamation :— Our sovereign lord the King chargeth and commandeth ail persons being assembled immediately to disperse themselves, and peaceably to depart to their habitations or to their lawful business, upon the pains contained in the Act made in the first year of King George for preventing tumults and riotous assemblies. God Save the King.