SEC Charges Individual for Market Manipulation Fraud Worth $10 Million by Making Coordianted Trades

The Securities and Exchange Commission (SEC) announced that it has charged James David O'Brien with carrying out a years-long multi-million dollar market manipulation scheme by making coordinated trades between multiple accounts maintained in his or his wife's names at different brokerage firms. 

The individual, O'Brien, 50 years old, from Gibbsboro, New Jersey, orchestrated the fraud for at least five years, during which he utilized at least 18 securities accounts at 14 different brokerage firms to artificially influence the market prices of more than 2,000 exchange-traded securities.

From 2015 to 2020, O'Brien coordinated trading in at least two different accounts in order to create the false appearance of trading interest and activity in particular stocks to enable him to purchase stocks at artificially low prices and then quickly sell them at artificially high prices. 

Specifically, O'Brien accumulated larger stock positions in one or more "winner" accounts at one brokerage firm, while at or around the same time placing smaller orders in the same securities on the opposite side of the market in one or more "helper" accounts at a different brokerage firm. O'Brien allegedly used helper account trades to decrease the price of the security before he acquired it in the winner accounts, and/or to increase the price of the security after he acquired it in the winner accounts, seeking to generate a net profit across all of the involved accounts. 

According to the complaint, O'Brien engaged in more than 18,000 of these coordinated trading events, with approximately 75% of the events resulting in net profits across the involved accounts. O'Brien allegedly obtained more than $9.6 million in net profits from his successful coordinated trading events.

Recently, SEC appointed Haoxiang Zhu​ as Director of Division of Trading and Markets.