US SEC Charges Individual for Running $10 Million Market Manipulation Fraud

The US Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC) announced today that it had filed charges against James David O'Brien for carrying out a years-long multi-million dollar market manipulation scheme. According to the press release, he allegedly coordinated trades between multiple trading accounts under his and his wife’s name at different brokers.

The individual from Gibbsboro, New Jersey, ran the fraudulent scheme for almost five years, specifically between 2015 and 2020, using 18 securities accounts in 14 different firms. The SEC’s complaint alleges that he profited over $9.6 million from the entire operation. In addition, the SEC claimed that O'Brien purchased stocks at artificially low prices and then quickly sold them at artificially high prices.

“Specifically, the complaint alleges that O'Brien accumulated larger stock positions in one or more ‘winner’ accounts at one brokerage firm, while at or around the same time placing smaller orders in the same securities on the opposite side of the market in one or more ‘helper’ accounts at a different brokerage firm,” the SEC said.

Authorities found that he had performed over 18,000 trades at the time of the fraudulent scheme, with 75% of them resulting in net profits across the involved accounts. The complaint was filed in a federal court in Manhattan.

The individual was charged with violating some antifraud provisions of the Securities Exchange Act of 1934, seeking permanent injunctive relief and civil penalties.

Front-Running Scheme Charges

Two months ago, the SEC charged Sergei Polevikov, a former quantitive analyst, for having operated a front-running scheme. Polevikov worked at ‘two prominent asset management firms,’ and such a scheme generate $8.5 million of illicit profits.

From at least January 2014 through to October 2019, the former quantitive analyst had privileged access to his employers’ securities orders and trades with the purpose of trading on his own scheme. The court documents filed before the US District Court for the Southern District of New York alleged that on nearly 3,000 occasions, Polevikov bought or sold stock on the same side as his employers.