SEC v. Stanley Awdisho; Michael Kundrat; and Kristopher Smolinski, No. LR-18894, Northern District of Illinois — Press Release
raw: Stanley Awdisho, Michael Kundrat and Kristopher Smolinski
Stanley Awdisho, Michael Kundrat and Kristopher Smolinski, No. LR-18894
Stanley Awdisho, Michael Kundrat, and Kristopher Smolinski manipulated stock option prices between September and December 1999 using 'small lot baiting' (spoofing) to profit at least $25,000, and settled with the SEC by consenting to permanent injunctions and paying civil penalties of $10,000 each for Awdisho and Kundrat and $20,000 for Smolinski.
The U.S. Securities and Exchange Commission charged day traders Stanley Awdisho, Michael Kundrat, and Kristopher Smolinski with market manipulation through a 'small lot baiting' scheme between September and December 1999. They placed small, deceptive limit orders on one options exchange to artificially move prices, then executed larger opposite trades on other exchanges at the manipulated rates before canceling the bait orders, unfairly profiting at least $25,000. Without admitting or denying the allegations, all three consented to permanent injunctions under Sections 9(a)(2) and 10(b) of the Securities Exchange Act and Rule 10b-5, with Awdisho and Kundrat each paying a $10,000 civil penalty and Smolinski paying $20,000.
Between September and December 1999, day traders Stanley Awdisho, Michael Kundrat, and Kristopher Smolinski engaged in a market manipulation scheme known as 'small lot baiting'—a form of spoofing—on U.S. options exchanges. They placed small limit orders on one exchange to artificially inflate or depress quoted bid or offer prices, then executed larger opposite trades on other exchanges at these manipulated prices before immediately canceling the initial bait orders. This tactic allowed them to obtain more favorable execution prices than would have been available in a fair market, resulting in at least $25,000 in illicit profits. On September 21, the U.S. Securities and Exchange Commission filed a settled complaint against them in the Northern District of Illinois, alleging violations of Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Without admitting or denying the allegations, all three consented to permanent injunctions barring future violations of these antimanipulation and antifraud provisions. Awdisho and Kundrat each agreed to pay a $10,000 civil penalty, while Smolinski, who the SEC determined played a more central role, paid a higher penalty of $20,000. The case marked one of the early SEC enforcement actions targeting spoofing behavior in options markets.
Extracted insights
- $25K $25,000 $10K–$100K
- $20K $20,000 $10K–$100K
- $10K $10,000 $10K–$100K
- court united states district court for the northern district of illinois
- organization United States District Court For The Northern District Of Illinois
- U.S. Securities and Exchange Commission announced the filing of a settled market manipulation action on September 21
- settled market manipulation action filed in United States District Court for the Northern District of Illinois
- settled market manipulation action against Stanley Awdisho, Michael Kundrat, and Kristopher Smolinski
- settled market manipulation action filed on September 21
- Commission's Complaint alleges approximately 75 times between September and December of 1999, Awdisho, Kundrat and Smolinski each manipulated the price of stock options
- Awdisho, Kundrat and Smolinski manipulated the price of stock options
- Awdisho, Kundrat and Smolinski engaged in a scheme commonly referred to as "small lo
The U.S. Securities and Exchange Commission announced the filing of a settled market manipulation action on September 21 in the United States District Court for the Northern District of Illinois against three individual day traders, Stanley Awdisho, Michael Kundrat, and Kristopher Smolinski. The Commission's Complaint alleges that approximately 75 times between September and December of 1999, Awdisho, Kundrat and Smolinski each manipulated the price of stock options by engaging in a scheme commonly referred to as "small lot baiting." Small lot baiting or "spoofing" involves an order placed by a market participant with the intention of briefly triggering a market movement from which the participant or others may benefit by trading the opposite side of the original manipulative order. The Complaint further alleges that to carry out the scheme, Awdisho, Kundrat and Smolinski placed limit orders for a small number of options contracts on one options exchange to artificially raise or lower that exchange's quoted bid or offer. Awdisho, Kundrat and Smolinski then purchased or sold much larger opposite positions on other exchanges that matched the artificially raised or depressed price displayed at the first exchange. After their larger orders were executed, the Awdisho, Kundrat and Smolinski immediately sent an order to cancel the initial bait order. As a result of the scheme, the Complaint alleges that Awdisho, Kundrat and Smolinski unfairly profited at least $25,000 by obtaining execution of their larger orders at more favorable prices than otherwise available in the market. Simultaneous with the filing of the Commission's Complaint, Awdisho, Kundrat and Smolinski consented, without admitting or denying the allegations of the Complaint, to permanent injunctions against future violations of Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the antimanipulation and antifraud Sections of the Exchange Act. Awdisho and Kundrat also consented to the payment of a $10,000 civil penalty. Smolinski consented to the payment of a $20,000 civil penalty.
The U.S. Securities and Exchange Commission announced the filing of a settled market manipulation action on September 21 in the United States District Court for the Northern District of Illinois against three individual day traders, Stanley Awdisho, Michael Kundrat, and Kristopher Smolinski. The Commission's Complaint alleges that approximately 75 times between September and December of 1999, Awdisho, Kundrat and Smolinski each manipulated the price of stock options by engaging in a scheme commonly referred to as "small lot baiting." Small lot baiting or "spoofing" involves an order placed by a market participant with the intention of briefly triggering a market movement from which the participant or others may benefit by trading the opposite side of the original manipulative order. The Complaint further alleges that to carry out the scheme, Awdisho, Kundrat and Smolinski placed limit orders for a small number of options contracts on one options exchange to artificially raise or lower that exchange's quoted bid or offer. Awdisho, Kundrat and Smolinski then purchased or sold much larger opposite positions on other exchanges that matched the artificially raised or depressed price displayed at the first exchange. After their larger orders were executed, the Awdisho, Kundrat and Smolinski immediately sent an order to cancel the initial bait order. As a result of the scheme, the Complaint alleges that Awdisho, Kundrat and Smolinski unfairly profited at least $25,000 by obtaining execution of their larger orders at more favorable prices than otherwise available in the market. Simultaneous with the filing of the Commission's Complaint, Awdisho, Kundrat and Smolinski consented, without admitting or denying the allegations of the Complaint, to permanent injunctions against future violations of Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the antimanipulation and antifraud Sections of the Exchange Act. Awdisho and Kundrat also consented to the payment of a $10,000 civil penalty. Smolinski consented to the payment of a $20,000 civil penalty.