19.12.2015, 00:07
On Establishing Facts of OJSC Lenenergo Equity Market Manipulation
OREANDA-NEWS. The Bank of Russia established facts of repeated and lengthy manipulation of the markets of ordinary and preference shares of OJSC Lenenergo (hereinafter, the Equity) at the trading of CJSC MICEX SE from September 2013 till June 2015.
The Bank of Russia's inspection revealed that during this period CJSC IC Energocapital made a series of transactions by prior arrangement with its customer ONPER TRADING LIMITED. CJSC IC Energocapital used the customer's trading account in its interests, which resulted in considerable deviations in the volumes of Equity trading, as well as demand and supply.
During this period, ONPER TRADING LIMITED and CJSC IC Energocapital systematically made a series of transactions within a short time span, which made a considerable share of daily Equity trading volume. These entities made bids simultaneously or within the seconds span. With rare exception, such deals resulted in the unchanged daily net-position of ONPER TRADING LIMITED in both equity and monetary terms. CJSC IC Energocapital and ONPER TRADING LIMITED were the key counterparties in the Equity market.
The inspection revealed that ONPER TRADING LIMITED and CJSC IC Energocapital with rare exception made deals in the Equity markets through offsetting orders placed by an authorised representative of CJSC IC Energocapital. In exceptional cases such offsetting orders were placed by two employees of CJSC IC Energocapital. These employees of CJSC IC Energocapital had the powers of attorney authorising them, among other things, to make any securities transactions on behalf of ONPER TRADING LIMITED without its prior agreement.
CJSC IC Energocapital had financial interest in achieving certain volume of trading in the OJSC Lenenergo equity markets, notably receiving a fee from its customer Energocapital-Consult LLC, the agent of the Equity issuer, under the relevant agreement in compliance with which one of parameters envisaged by the agreement was the achievement of certain monthly turnover in each OJSC Lenenergo equity market.
During the period under review, CJSC IC Energocapital was a market maker in the Equity markets. At the same time, CJSC IC Energocapital made equity transactions where ONPER TRADING LIMITED was a counterparty, on the basis of bids placed not within the contractual obligations of CJSC IC Energocapital as a market maker stipulated by the agreement with the Exchange.
Transactions between ONPER TRADING LIMITED and CJSC IC Energocapital made by the employees of CJSC IC Energocapital which resulted in considerable deviations in Equity trading volumes and supply and demand are considered as market manipulation in compliance with Clauses 2 and 4 of Part 1 of Article 5 of Federal Law No. 224-FZ, dated 27 July 2010, 'On Countering the Misuse of Insider Information and Market Manipulation and Amending Certain Laws of the Russian Federation'.
Thereby, the employees of CJSC IC Energocapital manipulated OJSC Lenenergo equity markets in the interests of CJSC IC Energocapital using the trading account of its customer ONPER TRADING LIMITED who had authorised CJSC IC Energocapital and its employees to make securities transactions on its behalf.
Market manipulation is a gross violation of the Russian legislation and a violation of professional conduct of financial market participants.
The Bank of Russia cancelled licences of professional securities market participant issued to CJSC IC Energocapital.
Administrative measures will be considered with regard to CJSC IC Energocapital and its officials involved in transactions made by the professional securities market participant, which resulted in Equity market manipulation.
The relevant inspection materials will be submitted to the law enforcement bodies.
The Bank of Russia's inspection revealed that during this period CJSC IC Energocapital made a series of transactions by prior arrangement with its customer ONPER TRADING LIMITED. CJSC IC Energocapital used the customer's trading account in its interests, which resulted in considerable deviations in the volumes of Equity trading, as well as demand and supply.
During this period, ONPER TRADING LIMITED and CJSC IC Energocapital systematically made a series of transactions within a short time span, which made a considerable share of daily Equity trading volume. These entities made bids simultaneously or within the seconds span. With rare exception, such deals resulted in the unchanged daily net-position of ONPER TRADING LIMITED in both equity and monetary terms. CJSC IC Energocapital and ONPER TRADING LIMITED were the key counterparties in the Equity market.
The inspection revealed that ONPER TRADING LIMITED and CJSC IC Energocapital with rare exception made deals in the Equity markets through offsetting orders placed by an authorised representative of CJSC IC Energocapital. In exceptional cases such offsetting orders were placed by two employees of CJSC IC Energocapital. These employees of CJSC IC Energocapital had the powers of attorney authorising them, among other things, to make any securities transactions on behalf of ONPER TRADING LIMITED without its prior agreement.
CJSC IC Energocapital had financial interest in achieving certain volume of trading in the OJSC Lenenergo equity markets, notably receiving a fee from its customer Energocapital-Consult LLC, the agent of the Equity issuer, under the relevant agreement in compliance with which one of parameters envisaged by the agreement was the achievement of certain monthly turnover in each OJSC Lenenergo equity market.
During the period under review, CJSC IC Energocapital was a market maker in the Equity markets. At the same time, CJSC IC Energocapital made equity transactions where ONPER TRADING LIMITED was a counterparty, on the basis of bids placed not within the contractual obligations of CJSC IC Energocapital as a market maker stipulated by the agreement with the Exchange.
Transactions between ONPER TRADING LIMITED and CJSC IC Energocapital made by the employees of CJSC IC Energocapital which resulted in considerable deviations in Equity trading volumes and supply and demand are considered as market manipulation in compliance with Clauses 2 and 4 of Part 1 of Article 5 of Federal Law No. 224-FZ, dated 27 July 2010, 'On Countering the Misuse of Insider Information and Market Manipulation and Amending Certain Laws of the Russian Federation'.
Thereby, the employees of CJSC IC Energocapital manipulated OJSC Lenenergo equity markets in the interests of CJSC IC Energocapital using the trading account of its customer ONPER TRADING LIMITED who had authorised CJSC IC Energocapital and its employees to make securities transactions on its behalf.
Market manipulation is a gross violation of the Russian legislation and a violation of professional conduct of financial market participants.
The Bank of Russia cancelled licences of professional securities market participant issued to CJSC IC Energocapital.
Administrative measures will be considered with regard to CJSC IC Energocapital and its officials involved in transactions made by the professional securities market participant, which resulted in Equity market manipulation.
The relevant inspection materials will be submitted to the law enforcement bodies.
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