SEC Wins Jury Trial in Layering, Manipulative Trading Case

Ad blocking detected

Thank you for visiting CanadianInsider.com. We have detected you cannot see ads being served on our site due to blocking. Unfortunately, due to the high cost of data, we cannot serve the requested page without the accompanied ads.

If you have installed ad-blocking software, please disable it (sometimes a complete uninstall is necessary). Private browsing Firefox users should be able to disable tracking protection while visiting our website. Visit Mozilla support for more information. If you do not believe you have any ad-blocking software on your browser, you may want to try another browser, computer or internet service provider. Alternatively, you may consider the following if you want an ad-free experience.

Canadian Insider Club
$299/ year*
Daily Morning INK newsletter
+3 months archive
Canadian Market INK weekly newsletter
+3 months archive
30 publication downloads per month from the PDF store
Top 20 Gold, Top 30 Energy, Top 40 Stock downloads from the PDF store
All benefits of basic registration
No 3rd party display ads
JOIN THE CLUB

* Price is subject to applicable taxes.

Paid subscriptions and memberships are auto-renewing unless cancelled (easily done via the Account Settings Membership Status page after logging in). Once cancelled, a subscription or membership will terminate at the end of the current term.

Washington, D.C.--(Newsfile Corp. - November 12, 2019) - Today, jurors in New York federal court returned a verdict in the Securities and Exchange Commission's favor against a trading firm headquartered in Kiev, Ukraine, and two individuals for their roles in an unlawful trading scheme that generated more than $25 million in illicit profit.

The SEC's evidence at trial showed that Nathan Fayyer and Sergey Pustelnik used their trading firm, Avalon FA Ltd., to illegally profit from two manipulative trading schemes. First, the defendants engaged in a layering scheme, a trading practice which involved placing and canceling orders to trick others into buying or selling stocks at artificial prices. Second, they engaged in cross-market manipulation, which involved buying or selling stocks to artificially impact options prices. These schemes generated more than $25 million in ill-gotten profit for Avalon. Fayyer was Avalon's named owner, and Pustelnik kept his controlling interest in Avalon undisclosed while embedding himself as a registered representative at Lek Securities Corp., a New-York based brokerage firm, in order to facilitate Avalon's trading. Lek Securities and its Chief Executive Officer, Sam Lek, who settled with the SEC prior to trial last month, admitted that the trading occurred and was manipulative.

"This case involved sophisticated, manipulative trading schemes, which generated millions in illicit profits," said Stephanie Avakian, Co-Director of the SEC's Division of Enforcement. "Today’s verdict demonstrates the SEC's willingness to take on complex trading schemes in litigation and our ability to achieve strong results."

"Layering and spoofing undermine the transparency and integrity of the markets. As the jury recognized, such fraudulent conduct violates the securities laws, and has no place in our markets," added Steven Peikin, Co-Director of the SEC's Division of Enforcement.

The jury found Avalon, Fayyer, and Pustelnik liable on all counts, including that they violated the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, that Avalon and Fayyer violated the market manipulation provision of Section 9(a)(2) of the Exchange Act, and that Avalon, Fayyer, and Pustelnik were each liable as a control person for the violations of others, according to Section 20(a) of the Exchange Act.

The SEC's litigation is being conducted by David J. Gottesman, Olivia S. Choe, and Sarah S. Nilson.  The SEC's investigation was conducted by Ms. Nilson, Owen A. Granke, and Carolyn Welshhans, and supervised by Melissa Hodgman and Antonia Chion.

Comment On!

140
Upload limit is up to 1mb only
To post messages to your Socail Media account, you must first give authorization from the websites. Select the platform you wish to connect your account to CanadianInsider.com (via Easy Blurb).