In Russia, for the first time, a verdict was passed on charges of market manipulation.

On August 13, the Kirovsky District Court of Kazan sentenced former Ak Bars bank trader Artem Lyulinsky to 2.5 years in prison on probation under an article on market manipulation on an especially large scale (part 2 of article 185.3 of the Criminal Code), Vedomosti . writes He was also banned from trading securities for three years. This is the first time that this article has been sentenced.

Scheme. The Central Bank learned about the manipulation of the securities market by a trader two years ago. In April last year, the criminal case went to court.

• Ak Bars bank trader Artem Lyulinsky made money by buying and reselling securities. From 2011 to 2016, he bought shares on the stock exchange at market prices from a personal brokerage account, and then placed an order to sell the same securities at a price higher than the market. After that, Lyulinsky redeemed them already from a working account.
• As a result, the trader earned 77 million rubles. For five years, Lyulinsky conducted 494 such transactions, trading 31 securities, including shares of Gazprom, Sberbank, VTB and other companies.
• When selling shares under the Lyulinsky scheme, the price of securities was 2.5–4% higher than the market price, but the size of transactions reached several tens of millions of rubles, so the trader managed to influence the market, said Valery Lyakh, director of the Central Bank’s department for combating unfair practices.
• Ak Bars conducted an internal audit, during which it found out that Lyulinsky did not comply with the requirements in the field of protecting the interests of the bank as an investor. The bank notified the Central Bank about this, fired Lyulinsky and turned to law enforcement agencies. Ak Bars estimates its damage at 76 million rubles.

Why were there no cases? In principle, cases of market manipulation are not widespread and there are not so many of them, says Sergey Egorov, managing partner of EMPP. If the Central Bank, which monitors the course of trading on the stock exchange, detects such a case and transfers the materials to law enforcement agencies, the TFR may refuse to initiate a criminal case or initiate it under another article of the Criminal Code - for example, on the fact of fraud. This article is much more common, and law enforcement agencies have already developed methods for investigating such cases. It is more difficult to investigate and prove the fact of not just fraud, but market manipulation.

• Market manipulation has been criminalized since 2010. The maximum punishment (under Art. 185.3) is imprisonment for up to seven years with a fine and deprivation of the right to hold certain positions.

Why is it important. The decision of the Kazan court is a significant fact in law enforcement practice, says a representative of the Central Bank. This means that there may be more such cases. The Bank of Russia will study the court's decision - this will allow for the preparation of documents that the regulator sends to law enforcement agencies for investigation.