On establishing facts of market manipulation of PJSC IC Rosgosstrakh ordinary shares during trading at PJSC Moscow Exchange

The Bank of Russia established the fact of market manipulation of PJSC IC Rosgosstrakh ordinary shares (further referred to as the Shares) during trading at PJSC Moscow Exchange (further referred to as the Exchange) in the period from 10 December 2013 through 28 April 2016 (further referred to as the Period).

The Bank of Russia’s investigation established that transactions in the Shares at the Exchange were conducted on the basis of a preliminary agreement, resulting in a substantial deviation in the trading parameters of the Shares. The following individuals were involved: Artyom I. Perkin, Kafiya A. Davlyatshina, Filipp A. Khomenok and Alexei S. Denisov.

The above-mentioned individuals’ actions facilitated continuous artificial maintaining of the price level of the Shares, in which considerable investments of non-governmental pension funds and individuals were made.

Importantly, within the Period, Artyom Perkin placed orders to trade the Shares based on an agreement concluded with a professional securities market participant officially acting as a market maker for the Shares.

However, the exemptions stipulated in Article 5, Section 3.3 of Federal Law No. 224-FZ ‘On Countering the Misuse of Insider Information and Market Manipulation and Amending Certain Laws of the Russian Federation’ (further referred to as Federal Law No. 224-FZ) do not cover the actions of Artyom Perkin. As a client of a professional securities market participant, this individual was not a party to a market maker agreement, and his actions could not have been aimed at maintaining the Share trading under a relevant agreement.

The actions taken by Artyom I. Perkin, Kafiya A. Davlyatshina, Filipp A. Khomenok and Alexei S. Denisov are qualified as manipulation for the Share market in accordance with Article 5, Sections 1.2 and 1.6 of Federal Law No. 224-FZ.

Starting from April 2016, the professional securities market participant acting as a market maker was the most active Share market participant. Moreover, the above period saw a sharp increase in the number of transactions involving a wide range of individuals, a large part of whom was brought in by organisations related to the issuer. The market maker’s actions alongside the increased number of the Share market participants facilitated maintaining the Share prices at the stable level.

Market manipulation including actions aimed at substantial deviations in trading parameters, as well as those to maintain trading parameters at a level otherwise unattainable is a gross violation of the requirements set forth by the legislation of the Russian Federation. Furthermore, it does not comply with the standards of professional conduct of financial market participants. With regard to the persons involved in market manipulation of the Shares, measures have been taken to prevent such actions in the future.

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