Canadian accused by U.S. of high-speed trading scheme pleads guilty

By Nate Raymond
Sept 14 (Reuters) - U.S. authorities have secured a guilty
plea in a first-of-its-kind criminal case against a Canadian man
accused of manipulating stock prices through an illicit,
high-speed trading strategy.
Aleksandr Milrud, 50, pleaded guilty to conspiring to commit
securities fraud on Thursday in federal court in Newark, New
Jersey, for orchestrating a so-called "layering" or "spoofing"
scheme that netted $1.9 million in profits.
"Mr. Milrud has accepted responsibility for his conduct and
looks forward to putting this matter behind him," Michael
Bachner, his lawyer, said in an email Monday.
Milrud, a Canadian citizen who resides in Ontario, Canada,
and Aventura, Florida, faces up to 4-3/4 years in prison under
federal sentencing guidelines, Bachner said.
Milrud, who in court papers describes himself as a day
trader, is scheduled to be sentenced Dec. 16.
A spokesman for New Jersey U.S. Attorney Paul Fishman, whose
office brought the case, had no immediate comment.
The plea came in the first federal securities fraud
prosecution involving layering, or spoofing, where traders place
and then quickly cancel orders to create a false impression of
demand.
The case, announced in January, came after the publication
of Michael Lewis's 2014 bestseller "Flash Boys," which contended
the markets were rigged in favor of high-speed traders and
prompted debate over the fairness of the U.S. stock markets.
Prosecutors said Milrud recruited a network of overseas
traders in South Korea and elsewhere to engage in layering and
other illegal strategies in exchange for a cut of the resulting
trading profits. ID:nL1N0US1NP
Prosecutors said Milrud's traders used a specialized
computer program to identify stocks including Baxter
International Inc BAX.N with high-trading volume to facilitate
their fast-paced layering scheme and to avoid detection.
While profits on individual traders were low, just $20 to
$100 each, prosecutors said the repeated, fast-paced trading was
done hundreds of times a day, resulting in more than $1.9
million in profits.
Milrud's case came after authorities in October 2014
announced the first criminal case over spoofing, bringing
commodities fraud and other charges against high-frequency
trader Michael Coscia. ID:nL2N0RX1IN
More recently, the U.S. Justice Department in April brought
charges including commodities fraud against London-based
day-trader Navinder Sarao for engaging in a market manipulation
scheme involving spoofing that contributed to the May 2010
"flash crash." ID:nL1N0XI2LM
Both those cases are still pending.
The Milrud case is U.S. v. Milrud, U.S. District Court,
District of New Jersey, No. 15-cr-00455.