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Day After SEC Charges HFT Trader With Spoofing, Another HFT Spoofer Sends S&P Soaring

Tyler Durden's picture




 

Just yesterday, the SEC charged Canadian Aleksandr Milrud with orchestrating a lucrative market manipulation scheme that relied on "layering" (or "spoofing") in which a trader places orders solely to trick others into buying or selling at artificially inflated or depressed prices... So we found it ironic that twice today, Nanex exposed examples of the "spoofing" manipulation in crude oil futures (which soared) and S&P 500 e-mini futures (which soared)...

 

As The SEC statement explained...

The Securities and Exchange Commission today charged a man living in Ontario, Canada, with orchestrating a lucrative market manipulation scheme that relied on “layering” in which a trader places orders solely to trick others into buying or selling U.S. publicly traded stocks at artificially inflated or depressed prices.

 

In a complaint filed in federal court in Newark, N.J., the SEC alleges that since at least January 2013, Aleksandr Milrud recruited online traders chiefly based in China and Korea and shared in the profits the traders made from manipulative trading in U.S. securities markets.  Milrud provided the traders with access to trading accounts and technology and instructed them on how to avoid regulatory scrutiny while engaging in layering strategies.  The SEC’s complaint also alleges that to distance himself from certain transactions, Milrud wired funds to an offshore bank account and had the money delivered to him in a suitcase filled with cash.

 

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Milrud.

 

“Layering is a deceptive practice to trick others into buying or selling a stock at artificially inflated or depressed prices,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit. “No matter where they are located, we continue to identify and investigate those whose trading practices threaten to undermine the fair operation of the U.S. securities markets.”

 

According to the SEC’s complaint, Milrud inserted numerous middlemen into his scheme in an effort to evade detection.  He had his traders use multiple computers, Internet protocol (IP) addresses, and user names.  Traders were provided at least two accounts, one to do what Milrud called “the dirty work” of layering and one to execute what he termed “clean” trades at prices affected by the dirty work of the first account.  Milrud instructed the traders to conduct layering on a wide variety of stocks while limiting the number of trades and the price changes, hoping to minimize attention to the manipulative trading.

 

“Milrud’s elaborate efforts to disguise this manipulative trading scheme were ultimately unsuccessful,” said Joseph G. Sansone, Co-Deputy Chief of the SEC’s Market Abuse Unit.  “His scheme was uncovered and he must now face the consequences of his actions.”

*  *  *

Nanex explains how it worked...

 

*  *  *

And then just one day later - at least 2 examples of the very same "spoofing"...

In Crude futures...

 

And in S&P 500 e-mini futures... Spoofing S&P 500 futures higher with a $200M order.

 

Source: @NanexLLC

*  *  *

These are your "most liquid and transparent capital markets in the world."

 

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Wed, 01/14/2015 - 22:06 | 5663041 nosoeawe
nosoeawe's picture

he learned it from watching the queen of spoofing: yellen and the crown prince: helicopter ben

Wed, 01/14/2015 - 22:17 | 5663089 Manthong
Manthong's picture

As the premier U.S. megalomaniac hag once said:

“At this point, what difference does it make?.

All this spoofer likely did was figure out a trickier way to spoof the spoofers and trigger the triggers and fluff the huffers.

 

Wed, 01/14/2015 - 23:06 | 5663270 taraxias
taraxias's picture

The day I see them shut down these HFT fuckers and not a day earlier I will know the SEC means business. Going after small fish means shit.

They add liquidity my ass.

It will never happen though.....NEVER.

Thu, 01/15/2015 - 02:59 | 5663750 Ignatius
Ignatius's picture

Market manipulation, imagine that....

Wed, 01/14/2015 - 22:08 | 5663044 Duc888
Duc888's picture

 

 

Whack-A-Mole.

Wed, 01/14/2015 - 22:07 | 5663047 logicalman
logicalman's picture

If the spoofer has the right cufflinks......

Wed, 01/14/2015 - 22:16 | 5663088 MarketAnarchist
MarketAnarchist's picture

Exactly. You are true to your name sir...

 

What we are witnessing is the FED enforcing their dominance or HFT and market rigging, by nailing those private entities who are not complicit and in line with the Governments agenda.

Wed, 01/14/2015 - 23:00 | 5663248 taraxias
taraxias's picture

BINGO !!!!

They lose this market, they lose everything.

They know that.

So they do whatever it takes, in this case ...........spoofing.

What a horror show.

Wed, 01/14/2015 - 23:41 | 5663372 fockewulf190
fockewulf190's picture

Well, if it´s her, then lets dump the spoofing nomenclature and call it something more accurate: varting.

Wed, 01/14/2015 - 22:16 | 5663090 MarketAnarchist
MarketAnarchist's picture

Exactly. You are true to your name sir...

 

What we are witnessing is the FED enforcing their dominance or HFT and market rigging, by nailing those private entities who are not complicit and in line with the Governments agenda.

Wed, 01/14/2015 - 22:09 | 5663053 Bear
Bear's picture

ES and CL will come down again because this time it's different. Spoof me once, spoof me twice .... but the third I spoof you

Wed, 01/14/2015 - 22:11 | 5663054 dirtyfiles
dirtyfiles's picture

wait ..you mean...NO

 

 

Wed, 01/14/2015 - 22:11 | 5663055 Seasmoke
Seasmoke's picture

Relax. We have Maxine Waters on this. 

Wed, 01/14/2015 - 23:20 | 5663314 Manthong
Manthong's picture

If gravity was stupidity, what would Maxine Waters be?

Thu, 01/15/2015 - 00:49 | 5663542 you enjoy myself
you enjoy myself's picture

a black hole?

Wed, 01/14/2015 - 22:11 | 5663058 The Shape
The Shape's picture

First clue he wouldn't get away with it - he didn't work for Goldman or JP.

Wed, 01/14/2015 - 22:27 | 5663135 buzzsaw99
buzzsaw99's picture

you don't spoof us, we spoof you!

free sergey. free corzine.

Wed, 01/14/2015 - 22:12 | 5663059 buzzsaw99
buzzsaw99's picture

what's funny is how such big moves are caused by such puny phony trades. waddell & reed almost single handedly demolished the "market". what does that tell you about the alleged liquidity?

there is no market, there is only old yeller

Wed, 01/14/2015 - 22:14 | 5663070 gatorengineer
gatorengineer's picture

and I will cry when old yeller dies....

Wed, 01/14/2015 - 22:13 | 5663076 buzzsaw99
buzzsaw99's picture

i will spoof you into buying a mini tomorrow. bwa ah ah!

Wed, 01/14/2015 - 22:13 | 5663065 gatorengineer
gatorengineer's picture

we spoofed some folks

Wed, 01/14/2015 - 22:14 | 5663078 medium giraffe
medium giraffe's picture

“His scheme was uncovered and he must now face the consequences of his actions.”

Does this mark a sudden policy shift for the SEC?!

Wed, 01/14/2015 - 22:24 | 5663120 dirtyfiles
dirtyfiles's picture

do you mean "dark pools" ?

Wed, 01/14/2015 - 22:18 | 5663096 ekm1
ekm1's picture

CENTRAL COMMAND

Wed, 01/14/2015 - 22:20 | 5663102 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Hey look, the SEC actually caught someone engaging in fraud. Oh, it's only a Canadian, pity.

Wed, 01/14/2015 - 22:29 | 5663139 buzzsaw99
buzzsaw99's picture

don't you have to throw canadians back? isn't there a size limit or something?

Wed, 01/14/2015 - 23:08 | 5663280 Eternal Complainer
Eternal Complainer's picture

They gotta offer up something

Wed, 01/14/2015 - 22:39 | 5663171 Bill of Rights
Bill of Rights's picture

Doing gods work.

Wed, 01/14/2015 - 22:41 | 5663184 Boomberg
Boomberg's picture

No way SEC sleuths could have figured this out. Likely ratted out by an insider. SEC needs to offer this guy a high paying career job instead of prosecuting him.

Wed, 01/14/2015 - 22:52 | 5663212 mpath
mpath's picture

Spoofing willmost likely continue-but that is short term stuff--if you want to make money with swing trades--follow this guy-he has nailed almost every top/bottom.

http://www.sentimenttiming.com/using-time-confident-trades/

 

 

 

Wed, 01/14/2015 - 23:06 | 5663266 Eternal Complainer
Eternal Complainer's picture

Yeah but when its a goldman/Fed manipulative rigging its ok..
Just like when central bankers tell lies.

Wed, 01/14/2015 - 23:41 | 5663375 Smuckers
Smuckers's picture

I'm probably aging myself, but is that really Nanex or just Atari Defender screen caps? 
Oh my bad - it's Parsec. 

 

Why do I get the feeling that the SEC reads these posts and then just squelch shut their squid eyes yelling "LAAA-LAA LAAA"?

 

Thu, 01/15/2015 - 00:05 | 5663444 walküre
walküre's picture

Thanks for bringing this to our attention. I was reading about Milruk yesterday and then today watched with fucking amazement how the spoofing carried on without any indictments to the big guys.

ZH is top notch and really stands out by connecting the dots

Thu, 01/15/2015 - 01:58 | 5663694 Atomizer
Atomizer's picture

Any SEC game of hide and seek.

Do NOT follow this link or you will be banned from the site!