The SEC charged two New Jersey-based traders with engaging in a fraudulent market manipulation scheme by artificially influencing market prices in more than two thousand NYSE- and NASDAQ-traded stocks. According to the SEC, the traders utilized dozens of accounts at various brokerage firms in order to carry out the manipulation scheme. They would use one account to buy a position in a stock (sometimes at an artificially deflated price), and another to place a series of small buy orders that "walked up" the price for the first account, at which point the larger position was sold into the market at an artificially inflated price. The SEC alleges that the traders reaped more than $26 million in profits from the illegal scheme.
The complaint, filed by the SEC in U.S. District Court in Newark, New Jersey, contains charges against the traders for violating, and aiding and abetting violations of, the antifraud provisions of the securities laws. The SEC seeks a permanent injunction and the return of ill-gotten gains, along with interest and penalties.
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