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US authorities freeze assets of China-based traders over alleged manipulation

[WASHINGTON] US authorities said on Wednesday it has obtained an asset freeze against 18 traders, who are primarily China-based, over an international market manipulation scheme that has reaped more than US$31 million in illicit profits over several years.

The US Securities and Exchange Commission (SEC) said the traders had been manipulating more than 3,000 US-listed securities for at least six years, using multiple accounts to create artificially high or low prices to buy or sell at a profit.

The SEC said it believed the scheme, which created the appearance of trading interest in thinly traded securities, was ongoing.

"We allege that defendants engaged in an extensive manipulation scheme and went to great lengths to evade detection, placing trades in over one hundred separate accounts at several different brokerage firms and submitting falsified documents to open new accounts in the names of others," Joseph Sansone, chief of the SEC's market abuse unit, said in a statement.

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In one instance, traders named Xiaosong Wang and Shun Sui allegedly earned about US$6,233 in illegal profits by buying and selling 6,000 shares of Connecticut-based television and online programming producer Chicken Soup for the Soul Entertainment over the course of two days in July 2018, authorities said.

The SEC detailed several similar schemes manipulating the prices of other securities, including consumer products company Helen of Troy Ltd, Ultragenyx Pharmaceutical, and gold investor Global X Gold Explorers ETF.

"The defendants knew, or were reckless in not knowing, that they were engaging in a securities fraud scheme," authorities said, adding that the traders received multiple warnings from brokerage firms about their manipulative trading.

The US Attorney's Office for the District of Massachusetts also announced criminal charges against two of the traders, Chinese citizens Xiaosong Wang and Jiali Wang. A public defender for the traders did not respond immediately to request for comment.

The two charged traders reside in China and have residences in Massachusetts.

It would be difficult for authorities to bring any China-based traders before US courts, given Washington does not have an extradition treaty with Beijing.

REUTERS