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FSA secures High Court injunction to stop market abuse

The FSA has obtained an interim High Court injunction to prevent three companies and three individuals from manipulating the market in UK-listed shares, and frozen the companies’ assets.

The FSA has issued proceedings against UK registered but Swiss-based fund manager Da Vinci Invest, a related Singapore-based company Da Vinci Invest PTE and Mineworld, which is registered in the Seychelles.

Individuals Szabolcs Banya, Tamas Pornye and Gyorgi Brad, all resident in Switzerland and/or Hungary who traded on behalf of those companies have also had proceedings issued against them.

The FSA believes these companies and individuals have committed market abuse through a form of manipulative trading known as ’layering’, which creates a misleading impression of the supply and demand of shares.

The companies and individuals traded across a number of UK trading platforms and the FSA estimates they made over £1m gross profit from this activity.

Between August 2010 and July 2011 large orders for shares were placed which the individuals had no genuine intention of allowing to trade. This had the effect of moving the share price up and down as the market reacted to the perceived change in supply or demand of the shares.

The traders would then take advantage of the price changes by repeatedly buying shares when the share price had been manipulated downwards and selling them when the share price had been manipulated upwards. At the same time, they would delete the initial orders which had manipulated the share price.

The FSA believes that Da Vinci Invest and Da Vinci Invest PTE were trading on their own accounts. The court order does not affect assets invested in funds managed by these companies or any associated companies.

The issue was flagged up to the FSA BY a multilateral trading facility on which one of the companies had traded.

The FSA obtained an interim injunction freezing the assets of the companies on July 12, and a further order continuing the freezing injunction and restraining the market abuse on August 31.

FSA acting director of enforcement and financial crime Tracey McDermott says: “This injunction shows the FSA will take swift and decisive action to protect the integrity of UK markets, wherever those seeking to abuse them are based. These companies engaged in repeated cross-platform market manipulation, which the FSA will not tolerate.”     

The FSA is continuing its investigation, and the associated court case is also ongoing.

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