SEC Files Settled Action Against Day Trader for Alleged Spoofing Scheme
By the Constantine Cannon Whistleblower Team
The Securities and Exchange Commission (SEC) recently filed a settled action against Mingran Wang, a day trader based in California, for allegations he engaged in a market manipulation and spoofing scheme that resulted in over $1.3 million in gains.[1] Under the settlement, Wang consented to certain injunctive relief and the court will determine disgorgement, interest, and penalties.[2] The DOJ has also filed criminal charges against Wang in a parallel proceeding.[3]
What Is “Spoofing” and How Did the Alleged Scheme Work?
The SEC alleged that between 2021 and 2024, Wang manipulated the prices of over 150 thinly traded American Depository Receipts (ADRs) by engaging in a practice known as “spoofing.”[4] Spoofing generally involves placing phony buy or sell orders for securities to move prices, trading to take advantage of the artificial price movement, and cancelling the phony orders. In this case, the SEC alleged “(1) Wang placed buy and sell orders for ADRs that he never intended to execute which moved the market price of the targeted ADR securities; (2) Wang then executed orders to buy or sell the ADR to take advantage of the manipulated price; and (3) Wang then canceled the non-bona fide orders he placed in the first step, typically before those orders could be executed.”[5]
The SEC’s complaint described a particular example, citing minute-by-minute order and trading records, to demonstrate how the alleged spoofing scheme worked:
“On January 23, 2023, at 10:16 a.m., Wang offered to sell the ADRs of Mabuchi Motor Co., Ltd. (OTCPK: MBUMY), a Japanese company whose ADRs trade on U.S. over-the-counter (OTC) markets, by placing a sell limit order of $7.33, below the [National Best Offer] NBO of $7.38. Four seconds later, Wang canceled the order after the NBO had moved from $7.38 to $7.33. Then, from 10:16 to 10:17 a.m., Wang submitted and promptly canceled seven additional orders, continuously lowering the offered limit price, which had the effect of further lowering the NBO to $7.04 and the midpoint price of the NBO and [National Best Bid] NBB to $6.86. At 10:17 a.m., Wang placed a final non-bona fide sell order, which he left open.
Minutes later, from 10:29 a.m. to 10:53 a.m., Wang purchased 4,400 shares of MBUMY through a different brokerage in an account in the name of his wife at the artificially low midpoint price of $6.865-$6.87/share. Then, at 10:57 a.m., Wang canceled his one remaining outstanding spoof sell order.”
“The next day . . . , Wang performed the scheme in reverse. At 9:37 a.m., Wang began placing—and promptly canceling—multiple visible buy limit orders for MBUMY well above the NBB, continuously raising the limit price. Wang’s orders had the effect of raising the NBB for MBUMY from $6.65 to a high of $7.00 and the midpoint price of the NBO and NBB from $7.075 to a high of $7.205.
Minutes after placing the first spoof buy order, Wang commenced selling the MBUMY shares from a different account, which he acquired the day before at manipulated low prices, selling all 4,400 shares at the midpoint price by 11:12 a.m. At 11:21 a.m., Wang canceled the remaining outstanding buy order.”[6]
The SEC claimed Wang’s alleged scheme violated Section 17(a)(1) and (3) of the Securities Act, Sections 9(a)(2) and 10(b) of the Exchange Act, and Rule 10b-5(a) and (c).[7]
A few specific allegations in the SEC’s complaint caught our eye.
What Did He Put in Writing?
In its complaint, the SEC alleged Wang kept notes and detailed instructions on the spoofing scheme on his computer:
In addition to these notes, the SEC also alleged that when U.S. Postal Inspectors searched Wang’s residence, “Wang told inspectors that he tried ‘to walk the price up [to] my advantage’ and thereby increase his trading profits.”[8]
This type of alleged evidence, coupled with the minute-by-minute timeline of order and trading history referenced above, provides a powerful insight into the type of evidence SEC enforcers look for when deciding whether to bring an enforcement action.
What is the SEC Whistleblower Program?
The SEC Whistleblower Program encourages anyone with information about potential securities law violations to report it to the SEC. Under the SEC Whistleblower Program, eligible whistleblowers may receive up to 30% of the monetary sanctions the government collects in enforcement actions based on whistleblower-provided information.
Constantine Cannon partner Dan Vitelli commented: “The SEC’s complaint in this case contains detailed allegations and powerful quotations of documents and statements that offer a valuable roadmap as to the type of information and evidence the SEC looks for when deciding whether to bring an action. Contemporaneous documents describing the alleged securities violation, coupled with order and trading records, give enforcers valuable information and context.”
The SEC has announced numerous whistleblower awards in recent months, including a massive $53 million award in April. This indicates that the SEC whistleblower program is alive and well and continuing to result in enforcement actions and awards for eligible whistleblowers.
To learn more about recent SEC whistleblower awards, check out our blog post here.
Constantine Cannon Has Extensive Experience Representing SEC Whistleblowers
Constantine Cannon has substantial experience representing SEC whistleblowers. If you believe you have a case or would like to learn more about the SEC Whistleblower Program, please contact us. We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.
[1] See https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26574 (press release).
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] See SEC v. Wang, No. 4:26-cv-6291 (N.D. Cal.), ECF No. 1 (Compl.) ¶¶ 15-19, available at https://www.sec.gov/files/litigation/complaints/2026/comp26574.pdf (emphasis in original).
[7] Id. ¶ 10.
[8] Id. ¶ 23.
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