Detecting manipulation of the market for bonds of OAO MSP-72 (MSP-72 OJSC) and ZAO ZAKAZCHIK-L (ZAKAZCHIK-L CJSC)

The Bank of Russia has established the fact of market manipulation for bonds of GazpromKO4, ALROSA BO1, ALROSA BO2, Alpha BO-7, Alpha BO-9 and Bashneft07 (further referred to as the Bonds) during trading on PAO Moscow Exchange in 2014-2015.

Within the above period, numerous trades of similar nature were conducted between OAO MSP-72 and ZAO ZAKAZCHIK-L, suggesting market manipulation in as many as 22 bonds. The said trades were concluded against matching orders having similar parameters and made within less than 30 seconds time difference, whereby ZAO ZAKAZCHIK-L systematically incurred losses concluding the said transactions and OAO MSP-72 gained positive financial result.

At the date of the transactions, Mr Igor Ye. Vasilyev was holding the position of Director General of the both companies mentioned above and personally made bids across brokerage accounts of OAO MSP-72 and ZAO ZAKAZCHIK-L.

It was established that Mr Igor Ye. Vasilyev is related to the owners of ZAO ZAKAZCHIK-L, i.e. Mr Ye. Vasilyev (holding 50% of the share) and Ms L. Vasilyeva (holding 50% of the share).

Mr Igor Ye. Vasilyev could have conducted the above-mentioned transactions with intention of withdrawing funds from the brokerage account of ZAO ZAKAZCHIK-L or giving the appearance of losses incurred by ZAO ZAKAZCHIK-L during on-exchange trading transactions, which were ultimately aimed at reducing its tax base.

Mr Igor Ye. Vasilyev’s activities in managing trading accounts led to a substantial deviation in the price of the Bonds and are qualified as market manipulation in accordance with Article 5, Part 1.2 of Federal Law No. 224-FZ, dated 27 July 2010, ‘On combating the misuse of insider Information and market manipulation (market abuse) and on amendments to certain legislative acts of the Russian Federation’. Along with that, the said activities are qualified as a breach of the prohibition set forth Article 6, Clause 2 of the said Federal Law.

The Bank of Russia has taken action to prevent a recurrence of similar violations in the future activities of the individuals involved in market manipulation. Reports on the operations of OAO MSP-72 and ZAO ZAKAZCHIK-L have been submitted to the Federal Tax Service.

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