SEC Charges North Carolina Day Trader for Manipulative Trading
Sept. 27, 2021
File No. 3-20599
September 27, 2021 - The Securities and Exchange Commission today announced settled charges against Xuepeng Xie of Cary, North Carolina for perpetrating a manipulative securities trading scheme that netted him over $1.8 million in profits.
According to the SEC’s order, Xie, a full-time day trader, engaged in manipulative trading strategies known as spoofing and layering to ensure that he could buy stocks at artificially low prices and sell the same stocks at artificially high prices. The order finds that Xie’s trading strategy involved placing a series of non-bona fide orders to buy or sell a stock, often at multiple price levels. According to the order, the purpose of these non-bona fide orders – which Xie did not intend to execute – was to create a false appearance of market interest in order to increase or decrease the market price of the stock. After artificially inflating or suppressing the market price of a particular stock, Xie placed bona fide orders to buy or sell the stock at advantageous prices and, according to the SEC’s order, typically canceled any open non-bona fide orders. The SEC’s order further finds that Xie used multiple brokerage accounts, held in his own name, in his wife’s name, and in the name of a corporate entity that he controlled, to carry out the scheme. On many occasions, Xie placed non-bona fide orders in one account and bona fide orders for the same stock in a different account.
The SEC’s order finds that Xie’s conduct violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the market manipulation provisions of Section 9(a)(2) of the Exchange Act. Without admitting or denying the SEC’s findings, Xie agreed to settle the charges by consenting to a cease-and-desist order and paying disgorgement of $1,864,787, prejudgment interest of $243,991, and a civil money penalty of $600,000. The SEC’s order also requires Xie to comply with an undertaking that prohibits him, for a period of five years, from directly or indirectly opening or maintaining any brokerage accounts in his name, the names of any immediate family members, or the name of any company over which he has any control, without providing the relevant broker-dealers a copy of the SEC’s order.
The SEC’s investigation was conducted by Han Nguyen, Matthew Koop, and Julia C. Green of the Division of Enforcement’s Market Abuse Unit in the Philadelphia Regional Office. The investigation was supervised by Joseph G. Sansone, Chief of the Market Abuse Unit. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.