Stefan Mark Boitcheff of South Australia, has been convicted and sentenced after pleading guilty to two market manipulation-related charges in the District Court of South Australia.
Mr Boitcheff was last week sentenced to one year and nine months imprisonment, with an order that he be released immediately upon entering into a recognisance to be of good behaviour for two years.
ASIC Commissioner Cathie Armour said, 'Any form of market manipulation undermines the integrity of our financial markets and creates an uneven playing field. It is important that markets operate fairly and that people who attempt to deliberately interfere in that process are brought to account'.
Mr Boitcheff pleaded guilty to two charges in respect of the following conduct:
- between 3 January 2013 and 16 July 2013, carrying out 112 transactions in CFDs relating to Anteo Diagnostics Limited (ADO) shares which had the effect of creating an artificial price for trading in ADO shares on the ASX; and
- between 8 May 2013 and 7 January 2014, carrying out 4 transactions in CFDs relating to ADO and in the shares of ADO, that had the effect of creating a false or misleading appearance of active trading in ADO shares on the ASX.
The Commonwealth Director of Public Prosecutions prosecuted this matter.
A CFD is an agreement between an investor and a CFD issuer which allows a trader to speculate on future price movements in a financial product, such as shares. The value of a CFD roughly corresponds to the value of the underlying financial product, in this case, shares on the ASX.
The CFD trading accounts used by Mr Boitcheff operated on a direct market access model, under which the CFD issuer hedged its exposure to a client’s trading position by causing a direct and equivalent position to be taken in the underlying security on the ASX. This hedging mechanism can result in CFD trades having an immediate impact on the underlying shares being traded on the ASX. The CFD issuer's clients are able to see the CFD positions translate to an actual buy or sell order in the underlying shares on the ASX.
ASIC has recently taken a number of market manipulation actions involving CFDs.
In June 2014, Kristoffer John Watts was sentenced in the Brisbane District Court to two years imprisonment, with 21 months of the sentence suspended, and three months imprisonment to serve, following pleas of guilty to three charges of market manipulation involving trading in direct market access CFDs. (refer: 14-131MR).
In September 2015, Nigel Derek Heath was sentenced in the District Court New South Wales to two years and three months imprisonment, to be released after nine months on a recognizance release order, following pleas of guilty to two charges of market manipulation involving trading in shares and CFDs. In February 2016, the Court of Criminal Appeal in Sydney upheld an appeal by Mr Heath against the sentence imposed on him by the District Court in September 2015. (refer:16-051MR).
In December 2014, ASIC accepted an enforceable undertaking from First Prudential Markets Pty Ltd, a provider of direct market access CFDs, relating to concerns about its compliance processes for detecting and dealing with potentially manipulative client trading. (refer: 14-345MR).