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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
BLACKWELL POMPER PRICE SHENKER ACT MARKET SPOOFING SHPILSKY ALEXANDER SECURITIES EXCHANGE ACT COMMISSION PRICE IMPROVEMENTS LIMIT ORDER BID FEDERAL SECURITIES LAWS VIOLATING ANTIFRAUD PROVISIONS PAY DISGORGEMENT ADMINISTRATIVE PROCEEDING JOSEPH BRADFORD TIMOTHY FRAUDULENT PRICE IMPROVEMENTS ORDER DISPLAY RULE EXECUTE COMPLAINT NBBO SEPARATE |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 17221 / November 5, 2001
SEC FILES ACTIONS AGAINST SIX INDIVIDUALS FOR "SPOOFING"
SEC v. Leonid Shpilsky, Alexander Shushkovsky and Grigory Kagan, (D.D.C.
Nov. 5, 2001).
SEC v. Israel M. Shenker, (D.D.C. Nov. 5, 2001) and In the Matter of
Israel M. Shenker, Administrative Proceeding File No. 3-10631,
Securities Act of 1933 Release No. 33-8029 and Securities Exchange Act
Release No. 34-45017.
SEC v. Joseph Ronald Blackwell, Bradford Dylan Blackwell and Timothy
Ryan Blackwell, (D.D.C. Nov. 5, 2001) and In the Matter of Joseph R.
Blackwell, Bradford D. Blackwell and Timothy R. Blackwell,
Administrative Proceeding File No. 3-10632, Securities Act of 1933
Release No. 33-8030 and Securities Exchange Act Release No. 34-45018.
SEC v. Alexander M. Pomper, (E.D.N.Y. Nov. 5, 2001).
The Commission announced today the filing of four cases against Leonid
Shpilsky, Israel Shenker, Joseph, Timothy and Bradford Blackwell
("Blackwells") and Alexander Pomper for engaging in a fraudulent
trading practice known as "spoofing." Spoofing is a trading scheme
used to obtain improper price improvements on stock trades in the
NASDAQ market. "Spoofers" exploit the SEC's Limit Order Display Rule
and market makers' willingness to execute customer orders at the
National Best Bid or Offer ("NBBO") price.
An example of spoofing from the Commission's Complaint filed today
against Alexander Pomper ("Pomper") is as follows Pomper placed a
limit order to buy 300 shares of Gumtech International ("GUMM") at
$11.375 per share when the best bid side of the NBBO was $11.0625 per
share and the best offer side was $11.4375 per share. Due to the Limit
Order Display Rule, Pomper's $11.375 per share buy order became the
new best bid price. Pomper then placed an order to sell 2000 shares of
GUMM at $11.375 per share through another market making firm. Pomper
obtained immediate execution at $11.375 per share (rather than
$11.0625 per share) because the other market maker honored the $11.375
best bid price created by Pomper's buy order. After Pomper obtained
his price improvement of $.3125 per share, or $625.00, he canceled his
order to buy at $11.375. Pomper's conduct was deceptive because he
improved the NBBO with a limit order he did not actually want filled.
In separate actions filed today, the Commission alleged that Shpilsky,
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