Subject : Ruling on Spreading Rumors to Increase Stock Prices
Fatwa Number : 3402
Date : 18-07-2018
Classified : Partnership in Business
Fatwa Type : Search Fatawaa

Question :

One economic group plans to spread rumors to increase the stock prices of a certain company. Is it permissible that I buy the stocks of this particular company prior to the increase so that I sell them latter for a higher price. In fact, I have neither the power nor the potential to stop this group from doing that because they work on an international level, and I can`t even tell the people about the truth of the matter because it happens suddenly. However, the company`s work and stocks are, in principle, lawful.

The Answer :

All perfect praise be to Allah, The Lord of The Worlds, and may His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

Islamic Law (Sharia) prohibits lying and deception in transactions. This is because Allah, The Almighty, said, "Those who faithfully observe their trusts and their covenants; " {Al-Mu`minun, 8} and "O ye who believe! Fear God and be with those who are true (in word and deed)." {At-Tawbah, 119}. In addition, The Messenger of Allah (PBUH) said, "and he who cheats us is none of us." {Related by Muslim}. When stockbrokers spread rumors to increase stock prices, this is considered Najash, which the Messenger of Allah(PBUH) has prohibited. Actually, Najash is to offer a man more than the worth of his goods when you don`t mean to buy them and someone else follows you in bidding, and this contradicts the Islamic ethics.

However, if the person investing in the stock market keeps up with the political and economic changes, knows how stockbrokers act and doesn`t resort to spreading rumors, then he is permitted to buy and sell stocks so long as he abides by the rules of Sharia governing this transaction. This is because Sharia commands a Muslim to be perceptive.

Nonetheless, if the investor mentioned in the above question was actually working for that economic group which spreads the rumors or he plays a role in increasing the stock prices to lure others, then it is prohibited that he benefits from this investment, even if he hasn`t spread the rumors himself. And Allah knows best.



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