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by Mike Caswell

The U.S. Securities and Exchange Commission and the U.S. Department of Justice have charged a Canadian man with fraud for a multimillion-dollar market manipulation scheme that ran over a two-year period. Prosecutors claim that Aleksandr Milrud of Ontario masterminded a "layering" operation. He allegedly employed traders in Asia to manipulate many high-volume stocks by pennies, profiting from small price variations. FBI agents arrested Mr. Milrud in Florida on the charges Tuesday morning.

The scheme, as described by prosecutors, was a form of high-speed trading in which groups of traders working for Mr. Milrud used specialized software to rapidly place orders. The traders entered false buy and sell orders to influence the price of a stock. As the market reacted, the traders were able to rapidly profit from small price fluctuations, prosecutors claim. Mr. Milrud allegedly told a broker that his scheme generated $1-million every month. (All figures are in U.S. dollars.)

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