On establishing facts of securities market manipulation by group of individuals

The Bank of Russia has established the fact of manipulating markets of 37 securities at CJSC FB MOEX trading from 1 January 2014 through 25 August 2015 by a group of individuals comprising Natalya N. Kornilova, Pavel M. Govorov, Mariya V. Smirnova and Andrei N. Kornilov whose actions were aimed at extra high profit making.

The examination launched by the Bank of Russia revealed that Andrei N. Kornilov as an authorised officer of the credit institution PJSC BALTINVESTBANK made transactions on its behalf by preliminary agreement with Natalya N. Kornilova, Pavel M. Govorov and Mariya V. Smirnova. The said transactions resulted in a positive financial outcome in favour of Natalya N. Kornilova, Pavel M. Govorov and Mariya V. Smirnova through incurring comparable damage to the commercial bank. Such actions in many cases produced substantial deviation in corresponding securities trading parameters. The examination also detected multiple interlinks between Natalya N. Kornilova, Pavel M. Govorov, Mariya V. Smirnova and Andrei N. Kornilov.

The following scheme was used to make transactions. A private individual (Natalya N. Kornilova, Pavel M. Govorov or Mariya V. Smirnova) opened a position by acquiring securities or by their unsecured selling and shortly after that submitted an application to close such position at a favourable price. Then Andrei N. Kornilov acting on behalf of the credit institution initiated deals with the same securities and in the same direction in which a private individual opened the position. This resulted in a substantial change in price for such securities thus increasing the financial gain for a private individual on a selected position which turned out to be profitable when closed. Averagely, a position was closed 1-2 minutes after it was opened. Within the time span under examination, Natalya N. Kornilova, Pavel M. Govorov, Mariya V. Smirnova did not make any other transactions.

Pursuant to Clause 2 of Part 1 of Article 5 of Federal Law No. 224-FZ, dated 24 July 2010, ‘On Countering the Misuse of Insider Information and Market Manipulation and on Amending Certain Laws of the Russian Federation’ the actions performed from 1 January 2014 through 25 August 2015 by Andrei N. Kornilov on behalf of the credit institution, as well as by Natalya N. Kornilova, Pavel M. Govorov and Mariya V. Smirnova by preliminary agreement that resulted in substantial deviations in securities trading parameters fall under market manipulation.

Individuals involved in market manipulation are hold administratively responsible by the Bank of Russia. Also, the Bank of Russia cancelled financial market qualification certificates issued to Andrei N. Kornilov.

If taken separately, a series of such transactions which includes the opening by a private individual a position and its full closure with commercial institution’s participation, brought a tiny financial result to a private individual considering the size of such commercial organisation. However, a total size of the profit gained over the examined time span through the securities market manipulation by a group of people from over 700 series of transactions within a long period of time in particular, fall under a big size category in accordance with the Criminal Code of the Russian Federation.

The Bank of Russia will submit relevant materials to law enforcement authorities.

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25.08.2016 00.00.00