US brokers to pay for helping Ukrainian market manipulation

Chris Hamblin

9 October 2019

The SEC’s complaint, filed in March 2017, said that Avalon illegally profited from layering (which involved placing and cancelling orders to trick others into buying or selling stocks at artificial prices) and cross-market manipulation, which involved buying or selling stocks to artificially effect option prices. The SEC alleged that Lek Securities and Sam Lek made the schemes possible by giving Avalon access to the US markets, relaxing the brokerage firm’s layering controls after Avalon complained, allowing Avalon to conduct the trading activity, and improving Lek Securities’ IT to help it trade.

Lek Securities will pay a $1 million penalty, plus $525,892 in disgorgement and prejudgment interest, and Sam Lek will pay a $420,000 penalty. Lek Securities has agreed to a three-year injunction that largely prohibits it from providing intra-day trading to foreign customers. It will also hire an independent compliance monitor for that period.