On establishing the fact of securities market manipulation by a group of individuals
The Bank of Russia has established the fact of manipulation of the market for 8 securities traded on ZAO FB MMVB (MICEX Stock Exchange, CJSC) over the period from 9 January 2013 to 2 July 2015. Market manipulation, orchestrated by Yuriy D. Khilov, was committed by a group of persons comprising Natalia I. Khilova, Igor A. Novikov and Tatiana V. Novikova. The actions taken by the above persons resulted in receiving inordinately high income by the said individuals.
The investigation to establish the fact of the above market manipulation was conducted by the Bank of Russia with the kindest assistance from the German financial market regulator Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin) under the IOSCO Multilateral Memorandum of Understanding (IOSCO MMoU).
During the course of its investigation the Bank of Russia established that Yuriy Dmitrievich Khilov, as an authorized officer of OOO Deutsche Bank (Deutsche Bank Ltd), was conducting trades across the accounts of Deutsche Bank London Branch (OOO Deutsche Bank’s client) in collusion with his relatives Natalia I. Khilova, Igor A. Novikov and Tatiana V. Novikova. Consequently, Natalia I. Khilova, Igor A. Novikov and Tatiana V. Novikova gained a positive financial result thereby causing detriment of similar amount to Deutsche Bank London Branch. That said, most of the above trades resulted in a significant deviation of the relevant securities trading parameters.
The following trading mechanism was used when concluding the trades. An individual (Khilova N.I., Novikov I.A., Novikova T.V.) bought or sold a block of securities (generally using funds borrowed from brokers), while he/she placed an order to purchase/sell back an equivalent amount of securities shortly afterwards. During periods of trading activity performed by the above individuals, Khilov Yu.D. was concluding trades on behalf of Deutsche Bank London Branch in the same securities, in the direction ensuring a favourable price level for the said individuals. Moreover, the orders to buy/sell back the securities were fully or partially filled by the orders Yu.D. Khilov was placing on behalf of Deutsche Bank London Branch. Therefore, the said individuals had several minutes to buy and sell the securities, thereby achieving a positive financial result.
Pursuant to Article 5, Section 1.5 of Federal Law No.
The above actions, circumventing the requirements and procedures established by OOO Deutsche Bank, were performed by Khilov Yu.D. for a continuous period of time.
The Bank of Russia will take appropriate measures prescribing Khilov Yu.D., Khilova N.I., Novikov I.A. and Novikova T.V. to refrain from any further violations similar to those indicated herein.
According to the Criminal Code of the Russian Federation, the amount of illicit income derived from securities market manipulation by the above individuals over the relevant period is qualified as inordinately high income.
The Bank of Russia has sent relevant documents pertaining to the investigation to the law enforcement authorities of the Russian Federation.
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20.12.2016 00.00.00