False inducement is committed when an individual or company induces another to trade in securities (either buying or selling) through a misstatement of the facts, either by misrepresenting or omitting significant facts.
An example of false inducement that may lead to an ISA investigation:
A person owns shares in a public company in the energy sector. Since the company's operations and investments have failed to discover any findings relating to deposits of target minerals, the individual in question decides to sell his shares in the company. However, in view of the company's results, the demand for its shares is limited and trading is extremely thin. The individual uploads a post on the energy forum of a popular website, in which he states that a meeting with the company's CEO leads him to believe that the company's findings indicate that there is a large chance that the company will discover a commercial-scale deposit of the target minerals, and the company is expected to publish an immediate report on the matter. In reality, no such meeting took place and the company discovered no such indications. Demand for the company's shares soars immediately after the post is published, and the individual in question uses the opportunity to sell his entire shareholding in the company.