The Bank of Russia has established facts of market manipulation in on-exchange trading for the units of Rental Closed-end Unit Investment Fund (CUIF) Capital Investments (ISIN RU000А0JTJR0) and units of Rental CUIF Strategic Investments (ISIN RU000A0JTYP3) (hereinafter, the Units) managed by CAPITAL ASSET MANAGEMENT LLC (TIN 7705934845) (hereinafter, the Exchange) in 2015–2017 by the professional securities market participant IC VITUS LLC (TIN 5906001605) with the involvement of clients controlled by the latter.
IC VITUS LLC made mutual deals with the following clients: CAPITAL CITY LLC (TIN 5903119550) and RIEL CITY (TIN 5902244572) (hereinafter, the Clients) in the period from 30 November 2015 to 31 March 2016 in the market for the units of Rental CUIF Capital Investments and in the period from 30 November 2015 to 21 March 2017 in the market for the units of Rental CUIF Strategic Investments.
The share of mutual deals between IC VITUS LLC and the Clients in the total trading amount of each of the markets for the Units during the indicated periods exceeded 99%. Thus, the above entities were fully responsible for shaping the Units’ prices. The Units were recorded as financial investment as part of the own funds of IC VITUS LLC and accounted for 55% to 78% of the company’s financial investment over the specified periods of deals with the Units. This suggests a direct interest on the part of IC VITUS LLC in maintaining the Units’ exchange prices.
IC VITUS LLC and the Clients made prearranged deals with the Units in the main trading mode on the Exchange on the basis of offsetting orders with identical parameters submitted with the minimum difference in time. This said, the specified deals with the Units had no obvious economic sense and were aimed at the artificial shaping, maintenance and increase in the market prices of the Units.
The deals between IC VITUS LLC and the Clients led to substantial deviations in the prices and volumes of Unit trading. Several deals with the Units made by IC VITUS LLC and the Clients are classified as the Units’ market manipulation under Clause 2 of Part 1 of Article 5 of Federal Law No. 224-FZ, dated 27 July 2010, ‘On Countering the Misuse of Insider Information and Market Manipulation and Amending Certain Laws of the Russian Federation’ (hereinafter referred to as the Federal Law). The above-mentioned entities violated the ban imposed by Part 2, Article 6 of the Federal Law.
Earlier, the Bank of Russia decided to cancel professional securities market participant licences for brokerage, dealer activities, depository activities and securities management activities issued to IC VITUS LLC, including following the violations of the requirements of the Federal Law.
The Bank of Russia has sent IC VITUS LLC orders to cease and desist from future violations.