The Securities and Exchange Commission is charging a Canadian citizen with running a market manipulation scam that involved making orders to trick others into selling or purchasing U.S. publicly traded stocks at prices that were depressed or artificially inflated. The strategy is known as “layering.” U.S. Attorney’s Office for the District of New Jersey has filed criminal charges against Aleksandr Milrud in a parallel action.
According to the SEC’s complaint, submitted in a federal court, Milrud started recruiting online traders primarily in Korea and China beginning at least as early 2013 and giving them the cut of the profits made from the scheme. He purportedly gave traders access to trading accounts and told them how to avoid coming under the regulatory scrutiny when layering.
To avoid detection, Milrud would wire funds to an offshore account and have the money delivered to him in a suitcase, as well as use middlemen. He also allegedly had traders use multiple user names, addresses, computers, and Internet protocols (IP).
Traders were instructed to use two accounts. In one account they would employ layering, in the other they would engage in “clean” trades that would be impacted by the layering done in the other account. Layering was to be performed on different kinds of stocks while limiting the amount of price changes and trades.
The commission is charging Milrud with aiding, violating, and abetting federal securities laws’ anti-fraud provisions, as well as violations of the SEC’s antifraud rule. The regulator is also holding Milrud liable for the traders’ conduct.
Read the Complaint (PDF)
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