Two New Jersey traders were arrested on federal charges they cheated investors out of $26 million by using dozens of accounts at brokerage firms to artificially move stock prices in lightly traded securities.
Joseph Taub and Elazar Shmalo are accused of manipulating 23,000 trades in 2014 and 2015 alone, usually through “two or more trading accounts that bought and sold the same lightly traded stock on the same day during the same period of time,” U.S. Attorney Paul Fishman said in a statement.
“The trading manipulations usually lasted just a few minutes each, during which time the conspirators sometimes controlled at least 80% of the volume of a targeted stock and traded in several accounts simultaneously,” Mr. Fishman said.
The U.S. Securities and Exchange Commission also filed a civil-fraud lawsuit.
The SEC alleged that Messrs. Taub and Shmalo “schemed dozens of times per trading day to artificially move stock prices for their personal benefit,” Andrew Calamari, director of the agency's New York regional office said in a statement.
Authorities didn't identify the stocks involved, but the SEC complaint said the shares traded on the Nasdaq and the New York Stock Exchange.
Messrs. Taub and Shmalo were charged in a Federal Bureau of Investigation complaint with conspiracy to commit securities fraud. They face as many as five years in prison.
Steven Yurowitz, an attorney for Taub, and Michael Long, Shmalo's lawyer, didn't immediately return calls seeking comment.