On establishing fact of abuse of unit market of Montes Auri Mountain real estate CUIF

The Bank of Russia established a fact of repeated and continuous abuse of the market of investment units of Montes Auri Mountain closed-end real estate unit investment fund (Montes Auri Mountain real estate CUIF) from July 2011 till June 2014.

The market of investment units of Montes Auri Mountain real estate CUIF was almost completely created artificially by a group of interconnected individuals also having indirect ties with Montes Auri LLC, the management company of Montes Auri Mountain real estate CUIF. Most transactions with investment units at the CJSC MICEX SE were effected by prior arrangement between Denis Bredikhin, Dmitry Yakovenko, Aleksander Pristupnistkiy, Sergey Vikharev, and Rinat Battalov. These individuals maintained trading activity and quotations of investment units, in some cases their mutual transactions made up to 100% of the daily traded value of Montes Auri Mountain real estate CUIF.

The character of investment unit transaction bids, systematic nature of transactions, limited number of trading participants, evident connection between counterparties, and lack of economic feasibility for some of them show that the transactions were effected by prior arrangement between the counterparties and liquidity, price, trade volume, investment unit supply and demand were maintained artificially.

These actions are supposed to be aimed at misleading investors in terms of price and liquidity of Montes Auri Mountain real estate CUIF.

Pursuant to Clause 2 of Part 1 of Article 5 of Federal Law No. 224-FZ, dated 27 July 2010, ‘On Counteracting Illegitimate Use of Insider Information and Market Abuse and Amending Separate Legislative Acts of the Russian Federation’, the actions taken by D.A. Bredikhin, D.A. Yakovenko, S.V. Vikharev, and R.R. Battalov by prior arrangement and resulted in significant unit trading price, supply and demand deviation are considered to be market abuse. These actions are gross violation of the Russian legislation.

Pursuant to Clause 5 of Part 1 of Article 14 of Federal Law No. 224-FZ dated 27 July 2010 ‘On Counteracting Illegitimate Use of Insider Information and Market Abuse and Amending Separate Legislative Acts of the Russian Federation’, the Bank of Russia sent D.A. Bredikhin, D.A. Yakovenko, S.V. Vikharev, and R.R. Battalov prescription to avoid similar violations in the future.

The Bank of Russia also considers other measures to be applied to individuals engaged in market abuse.

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19.02.2015 00.00.00