SEC secures final judgment against Avalon in market manipulation case
The United States Securities and Exchange Commission (SEC) today secured an important win in its case against a Ukraine-based trading firm accused of manipulating the US markets.
Today, Judge Denise L. Cote of the New York Southern Distict Court signed an order targeting Avalon FA Ltd, its named owner Nathan Fayyer and Sergey Pustelnik, who allegedly kept his controlling interest in Avalon undisclosed.
The order, seen by FX News Group, states that Avalon, Fayyer, and Pustelnik will each have to pay a civil penalty of $7.5 million. The Court also ordered each defendant to be permanently enjoined from violating Sections 9(a)(2) and 10(b) of the Exchange Act, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act.
Let’s recall that this case was launched back in March 2017. The SEC’s complaint alleged that Avalon FA Ltd touted itself to traders as a destination to engage in layering, a scheme in which orders are placed but later canceled after tricking others into buying or selling stocks at artificial prices, resulting in illicit profits. Avalon allegedly made more than $21 million in the layering scheme involving U.S. stocks during a five-year period.
According to the SEC’s complaint, Avalon also made more than $7 million in illicit profits through a cross-market manipulation scheme in which the firm bought and sold U.S. stocks at a loss in order to manipulate the prices of the stock and its corresponding options so that it could then profitably trade at artificial prices. Avalon is said to have used traders in Eastern Europe and Asia to conduct its trading, and the firm kept a portion of the profits and collected commissions from the traders.