SEC Obtains Final Judgment in Layering and Market Manipulation Case

Published On October 23, 2019

23 October 2019: The Securities and Exchange Commission has obtained final judgments against Lek Securities and it’s Chief Executive Officer, Sam Lek, after they were found to have facilitated manipulative trading by a Ukraine-based firm and client.

The SEC originally filed a complaint against Lek and its CEO in 2017, when it alleged that it had helped its customer, Avalon FA Ltd, conduct manipulative trading. The SEC suggested that Lek had given Avalon access to US markets, relaxed its layering controls, and improved its own technology to assist Avalon’s trading activities. As such, it facilitated its client’s layering activity – in which it had placed and cancelled orders to trick others into buying or selling stocks, and bought and sold stocks to artificially impact options trade prices. 

The final judgments were entered on 1 October 2019 and Lek Securities agreed to a three-year injunction, requiring it to terminate businesses with foreign customers potentially involved in market manipulation or manipulative trading. The company also agreed to retain an independent compliance monitor for a three-year period, while Sam Lek agreed to permanent injunctions. The firm will pay a $1m penalty, as well as $525,892 in interest. Sam Lek will pay a $420,000 fine.