Mexico Charges Fine to Industrias CH
The securities regulator of Mexico has imposed one of its largest fines for market manipulation on Industrias CH, a steel company, which is owned by Rufino Vigil Gonzalez, Mexico’s 11th richest man, according to the government data.
At the end of November, the steel company was fined 2.96 million pesos or $159,764, for making “prohibited sales” under a law forbidding simulating price or volume, the data showed on the website of CNBV, a Mexican banking and securities regulator.
Jose Luis Tinajero, the investor relations manager of Industrias CH, and its subordinate Simec were also fined. Meanwhile, the database entries for their fines were more specific, citing “various buy and sell trades that constituted simulation trades in terms of traded volume.”
Tinajero and Simec were fined on the same day the company was fined. Tinajero was fined 1.35 million pesos or $72,866 for “instructing” the trades that simulated volume, according to the database. Meanwhile, Simec was fined 545,049 or $29,419.
The CNBV, however, did not further explain why the company was stimulating trading volume or how it found out that the trades were problematic. The company did not give any comments.
Industrias CH, Chief Executive Sergio Vigil Gonzalez, and Jose Luis Tinajero did not also give any comment about the fines of CNBV.
According to a data, the fine for Industrias CH is the biggest of the 19 fines given out since 2014 under the manipulation article of Mexico’s market law.
A law professor specialized in corporations and securities, James Cox, said that the fines were low compared to the United States.
“The real message that is important is that the government has brought an enforcement action, and not just brought one, but has made a determination that there was a violation,” stated Cox.
However, an expert on market manipulation at a law firm, Zachary Brez, stated that in some cases brokerages could trade with themselves accidentally, when computer programs from the same firm cross orders.
According to Brez, it can be considered as a serious case when an investor plans self-trades to lift volumes or fix prices.
“When you are doing it intentionally, that is the real violation,” added Brez. “It is a version of fraud, by showing volume where it isn't.”
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Peter Blake | February 26, 2018