Jacko Law Group, PC
Call Today for a Consultation
San Diego 619-298-2880 San Francisco 415-766-3599 Los Angeles 213-631-2549

Manipulative Trading: Inside the Practice of "Layering"

The securities industry became privy once again to a form of manipulative trading - termed "layering" or "spoofing" - through the Securities and Exchange Commission's ("SEC's") recent charges against the Holmdel, N.J.-based firm Visionary Trading, LLC ("Visionary"). According to the SEC's April 4, 2014 press release, Visionary Trading, its owner, Joseph Dondero, and other owners not only participated in manipulative "layering" trading, but also perpetuated registration violations, including operating an unregistered brokerage firm, and policies and procedures issues that failed to "prevent and detect the improper sharing of commissions between its registered representatives." We will briefly focus in on the "layering" charges of this case in this blog post. "Layering" is a process in which a trader places orders with no intention of having them executed, but rather to trick others into buying or selling a stock at an artificial price, with that price,  in turn, being driven by the orders that the trader later cancels. In the case of Visionary, Dondero and others in the company used layering to "induce other market participants to trade in a particular stock."  Visionary, then, created greater order book depth and national market best-bid fluctuations through "false signals" which mimicked "true demand for the stock" in the placing and then canceling of the stock orders. The end result was Dondero and three other owners lining their pockets with phony orders placed at distorted prices at the entry of trades, a charge which the SEC states "did not allow him to evade detection." This case serves as a warning for firms to carefully review trading practices to help prevent against manipulative trading and the act of layering. It is prudent to check instant messaging and other forms of communications and to periodically conduct forensic testing for fraudulent activities. For further information on this and other related subjects, please contact us at [email protected]  or (619) 298-2880.

No Comments

Leave a comment
Comment Information
Email Us For A Response

How Can We Help?

Email us to request more information or to schedule an appointment.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

San Diego Office
1350 Columbia Street
Suite 300
San Diego, CA 92101

Toll Free: 866-497-2298
Phone: 213-631-2549
Phone: 619-298-2880
Fax: 619-298-2882
Map & Directions

San Francisco Office
Four Embarcadero Center
Suite 1400
San Francisco, CA 94111

Phone: 213-631-2549
Phone: 415-766-3599
Fax: 619-298-2882
Map & Directions

Los Angeles Office
535 N. Brand Boulevard
Suite 270
Glendale, CA 91203

Phone: 213-631-2549
Fax: 619-298-2882
Map & Directions