A Chinese citizen living in the Boston metropolitan area was sentenced recently in federal court in Massachusetts after pleading guilty to one count of conspiracy to commit securities fraud, officials announced.
Wang Jiali, 44, of Weymouth, was sentenced to time served (three months in prison) and nine months of home detention, and was ordered to forfeit $7.75 million in illicit proceeds.
He was charged with leading and participating “in a sophisticated market manipulation scheme aimed at the U.S. securities markets that was perpetrated primarily from China,” which illegally made more than $30 million on the New York Stock Exchange and Nasdaq.
“The scheme tricked institutions providing market liquidity to trade at artificial prices,” the U.S. Attorney’s Office stated.
According to court records, Wang is a resident of Weifang city of Shandong Province in China and resides in an apartment in the small town of Weymouth. He was about to fly to Beijing when he was arrested at Boston airport on Oct. 14, 2019. Wang’s cousin, Wang Xiaosong, was also arrested at his summer home in Upton, Massachusetts. They had traveled to the United States for the summer and returned to China in the fall.
The U.S. Attorney’s Office in Boston announced criminal charges against the pair for stock price manipulation and conspiracy to commit securities fraud.
The U.S. Securities and Exchange Commission (SEC) froze the assets of 18 Chinese traders including Wang Jiali. Most of the other 17 Chinese nationals mainly live in Shandong, a few live in Shanghai, and one is an institution registered in Hong Kong. They are accused of manipulating more than 3,000 stocks in the market and obtaining illegal profits of more than $31 million with a total of 3,900 manipulation activities.
On June 15, the SEC announced that had it obtained final judgments against the 16 defendants and 10 relief defendants based in China involved in the stock manipulation scheme. They were ordered to pay more than $75 million to the SEC.
Age-Old Manipulation Tactics
Before sentencing, Wang’s defense lawyers stated that Wang didn’t speak English, wasn’t trained as a broker in the United States, and didn’t understand U.S. laws and regulations. In addition, Wang isn’t affiliated with any American financial institution, nor did he use complex algorithms. He and his traders manually entered and canceled orders, and didn’t create any high-tech trading algorithms.The prosecution responded that Wang was “using age-old manipulation tactics, including the use of brokerage accounts in others’ names and coordinated trading on opposite sides of the market, the scheme fraudulently exploited nuances in modern market structure to generate millions of dollars in illicit profits,” and harmed “the integrity and efficiency of U.S. markets for retail investors.”
In addition, “a parallel criminal action” against Wang Jiali and Wang Xiaosong is pending. The SEC is pursuing fraud charges against Wang Jiali and the penalty for a judgment in September 2021 against Wang Xiaosong is yet to be determined.
