SEC seeks action against 18 traders in stock manipulation scheme
18 October 2019 Washington
Image: Shutterstock
The Securities and Exchange Commission (SEC) has filed an emergency action and obtained an asset freeze against 18 traders in a scheme to manipulate more than 3,000 US-listed securities for over $31 million in illicit profits.
The SEC’s complaint, filed in federal court in Boston, charges the 18 traders with violating and aiding and abetting violations of the antifraud provisions of the securities laws.
In addition, the SEC seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief.
In its complaint, the SEC alleged that the traders, who are primarily based in China, have manipulated the prices of “thousands of thinly traded securities by creating the false appearance of trading interest and activity in those stocks”.
According to the SEC, this enables them to reap illicit profits by artificially boosting or depressing stock prices.
As an example, the SEC noted in its complaint, the traders used multiple accounts to place several small sell orders to drive down a stock’s price before using a different set of accounts to buy larger amounts of the stock at artificially low prices.
The SEC explained: “After accumulating their position, the traders then flipped the script and placed several small buy orders to push up prices so they could then sell their stock at artificially high prices.”
Commenting on the case, Joseph G. Sansone, chief of the SEC's market abuse unit, said: “We allege that defendants engaged in an extensive manipulation scheme and went to great lengths to evade detection, placing trades in over one hundred separate accounts at several different brokerage firms and submitting falsified documents to open new accounts in the names of others.”
He added: “Despite their efforts, the SEC staff was able to uncover the connections between these seemingly unrelated accounts and expose the defendants' coordinated pattern of illicit trading."
Meanwhile, in a parallel action, the US Attorney's Office for the District of Massachusetts announced criminal charges against two of the traders, Jiali Wang and Xiaosong Wang.
The SEC’s complaint, filed in federal court in Boston, charges the 18 traders with violating and aiding and abetting violations of the antifraud provisions of the securities laws.
In addition, the SEC seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief.
In its complaint, the SEC alleged that the traders, who are primarily based in China, have manipulated the prices of “thousands of thinly traded securities by creating the false appearance of trading interest and activity in those stocks”.
According to the SEC, this enables them to reap illicit profits by artificially boosting or depressing stock prices.
As an example, the SEC noted in its complaint, the traders used multiple accounts to place several small sell orders to drive down a stock’s price before using a different set of accounts to buy larger amounts of the stock at artificially low prices.
The SEC explained: “After accumulating their position, the traders then flipped the script and placed several small buy orders to push up prices so they could then sell their stock at artificially high prices.”
Commenting on the case, Joseph G. Sansone, chief of the SEC's market abuse unit, said: “We allege that defendants engaged in an extensive manipulation scheme and went to great lengths to evade detection, placing trades in over one hundred separate accounts at several different brokerage firms and submitting falsified documents to open new accounts in the names of others.”
He added: “Despite their efforts, the SEC staff was able to uncover the connections between these seemingly unrelated accounts and expose the defendants' coordinated pattern of illicit trading."
Meanwhile, in a parallel action, the US Attorney's Office for the District of Massachusetts announced criminal charges against two of the traders, Jiali Wang and Xiaosong Wang.
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