U.S. authorities are alleging that a collection of traders based in China engaged in a complex market manipulation scheme.
The U.S. Securities and Exchange Commission (SEC) announced that it has secured an asset freeze against 18 traders who, it says, were involved in a scheme to manipulate more than 3,000 U.S.-listed securities, generating at least US$31 million in illicit profits.
The SEC alleges that traders manipulated the prices of thousands of thinly-traded U.S. securities, “by creating the false appearance of trading interest and activity in those stocks, thereby enabling them to reap illicit profits by artificially boosting or depressing stock prices.”
Along with the asset freeze, the SEC is seeking penalties and disgorgement against the traders accused of violating U.S. securities law.
Separately, the U.S. attorney’s office for the District of Massachusetts announced criminal charges against two of the traders for their role in the alleged stock price spoofing scheme.
None of the charges have been proven, and the parties are presumed innocent.
“We allege that defendants engaged in an extensive manipulation scheme and went to great lengths to evade detection, placing trades in over 100 separate accounts at several different brokerage firms and submitting falsified documents to open new accounts in the names of others,” said Joseph Sansone, chief of the SEC’s market abuse unit.
“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,” he added.