Facts of manipulation in the market for ordinary shares of PJSC RPC UWC established
The Bank of Russia has established facts of repeated and continuous market manipulation on an organised trading venue(hereinafter, the Exchange) for ordinary shares of PJSC RPC UWC (hereinafter, the Shares) conducted by non-resident companies GorTec Management Ltd (incorporated in Belize) and GTCP TRADING LTD (incorporated in the Republic of Cyprus) from 3 October 2016 to 2 May 2017.
The mutual purchase and sale transactions with the Shares, concluded between GorTec Management Ltd and GTCP TRADING LTD (hereinafter, the Companies), were devoid of clear economic sense and aimed at maintaining certain level of price and trading volume of the Shares. On the days of absence at trading sessions of major Shares market participants, including the ones interconnected with the Shares’ issuer, the proportion of the Companies in total trading volume averaged 30% to 50%. According to the Exchange, during the Period, the Companies conducted 275 transactions with the Shares with a significant deviation in trading volume.
In the course of its investigation, the Bank of Russia obtained technical and other data pointing to the fact that trading accounts of both Companies were managed by Aleksei S. Dokuchaev who offered market-making services via controlled Gorod Tekhologiy LLC and the website.
These transactions of the Companies in the Shares market are classified as the market manipulation and the violation of the ban under Clause 2 of Part 1 of Article 5 of Federal Law No.
However, the existence of a bilateral agreement between GTCP TRADING LTD and Otkrytie Broker JSC, a professional securities market participant, on the role of GTCP TRADING LTD in maintaining the Shares prices/quotes in both directions (buy/sell) does not create any legally important grounds allowing this company to act as a market-maker, and, therefore, prevents it from using the exemption set forth by Clause 3 of Part 3 of Article 5 of the Federal Law.
Over the Period, the Shares were actively purchased by several management companies operating for the account of non-governmental pension funds at the price formed at organised trading. The Bank of Russia has every reason to expect that the Share prices during the Period were maintained via manipulations in part for the purpose of improving the Shares’ investment appeal and supporting the long-term holding of the blocks of Shares by management companies within the assets of non-governmental pension funds.
The Bank of Russia also established the case when the additional issue of Shares was bought by a management company using the pension savings of a non-governmental pension fund for over 5 billion rubles via the intermediation of several non-resident companies, including UNITED WAGON PLC (Jersey) affiliated with PJSC RPC UWC. The difference between the prices for Shares purchased by non-resident companies to place them further and the prices for Shares sold to the management companies of a non-governmental pension fund made it possible for these intermediaries to derive 328 million rubles in income.
The well-coordinated activities of participants in these transactions, as well as the return thereon of non-resident companies ranging from 444% to 499% p.a., suggest a possible scheme aimed at diverting a part of non-governmental pension funds’ assets to the accounts of non-resident companies. Upon placing the Shares of the additional issue at a considerable discount, PJSC RPC UWC in turn did not receive a part of its funds invested in the Shares.
The Bank of Russia has submitted the investigation materials to law enforcement authorities.
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