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The Central Bank of the Russian Federation (Bank of Russia)

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On establishing facts of manipulation in the market for certain securities by D.E. Berger

The Bank of Russia has established multiple and lasting cases of manipulation of markets for 50 securities during the period from 3 February 2014 to 26 January 2017 conducted by Dmitry Eduardovich Berger, an employee of management company JSC Sberbank Asset Management.

D.E. Berger, who was authorised to perform securities transactions on behalf of JSC Sberbank Asset Management, systematically conducted collusive trades with a narrow range of corporate counterparties (hereinafter referred to as Counterparties) for the account of JSC Sberbank Asset Management as well as unit investment funds, the Pension Fund of the Russian Federation and FGKU ROSVOENIPOTEKA.

D.E. Berger also conducted similar transactions on behalf of the management company LLC UK Pensionnye Nakopleniya within the context of managing pension savings and pension reserves of JSC NPF of Sberbank.

These transactions were conducted during the period in question in accordance with the following scheme. A Counterparty made a purchase or a short sale transaction with a certain amount of securities at market prices and afterwards placed a limit order to close this new position with a profit. Usually, an Iceberg order was placed (an order with a hidden amount). After a short period of time (usually, less than a minute), D.E. Berger, acting on behalf of JSC Sberbank Asset Management or LLC UK Pensionnye Nakopleniya, placed one or several orders at prices that would ensure closing the Counterparty’s position with a profit.

This trading practice resulted in short-term substantial fluctuations in the prices of financial instruments as well as significant deviations in their trade parameters, and allowed Counterparties to receive a positive financial result.

According to Clause 2, Part 1, Article 5 of Federal Law No. 224-FZ, dated 24 July 2010, ‘On Countering the Misuse of Insider Information and Market Manipulation and Amending Certain Laws of the Russian Federation’ (hereinafter, the Federal Law), transactions conducted by D.E. Berger in the period between 3 February 2014 and 26 January 2017 on behalf of JSC Sberbank Asset Management and LLC UK Pensionnye Nakopleniya as well as the above-mentioned collusive acts of legal entities which resulted in a substantial deviation in the trading parameters of securities are qualified as market manipulation.

As a result of conducting over 1,000 of series of such transactions, Counterparties received an income of more than 150 million rubles, which, in accordance with the Criminal Code of the Russian Federation, is qualified as excessively large. At the same time, both JSC Sberbank Asset Management and entities managed by JSC Sberbank Asset Management and LLC UK Pensionnye Nakopleniya suffered losses of at least comparable size.

The Bank of Russia has sent the investigation materials confirming direct involvement of D.E. Berger in market manipulation to law enforcement authorities.

06 December 2018

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