Exclusive: Ukraine's Largest Broker Responds to $100 Mln Insider Trading Allegations

Some of the traders allegedly used insider information to trade on CFDs through various online brokers

Another firm from the forex industry is allegedly involved in the recently exposed financial hacking case. Dozens of traders from around the world, who seem to be linked to a hub in Ukraine, illegally traded on insider information stolen by hackers from newswires.

The US Securities and Exchange Commission (SEC) filed fraud charges against Concorde Bermuda Ltd., describing it as a “hedge fund established in Bermuda with its principal place of business in Kiev, Ukraine.” According to the charges, Concorde has proprietary trading accounts at Interactive Brokers which were used in connection with the fraudulent scheme, resulting in approximately $3.6 million in ill-gotten gains.

The SEC adds that those Concorde trades were often made in the same securities, on the same days and close to the same times, and often through the same IP addresses as Oleksandr Makarov, a 32 years old from Kiev, who worked in the financial services industry for various investment companies, including Phoenix Capital.

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In addition, in April 2014, Concorde Capital Partners wired Jaspen approximately $1.5 million. Jaspen traded CFDs through a number of well established online brokers commonly used by retail and institutional traders alike: Saxo Bank, Cantor Fitzgerald, GFT, and ADM. Each of the CFD providers hedged its exposure created by the CFD trades by executing trades in the United States. Thus, these CFD trades were the proximate cause of trades in the United States equity markets.

The trading occurred in the window of time between when the press releases were uploaded to the Newswire Services’ computer systems and when they were publicly released, often close in time to the issuers’ upload of releases to the Newswire Services.

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Who Is Concorde?

Concorde Bermuda is part of the same business group as Concorde Capital, the firm behind the so-called Forex Trend 2.0 project. Forex Trend was a Ukrainian broker registered in New Zealand that shut down without notice, taking with it all of its clients’ funds. However, the traders remained active in online forums where they speculated on the chances for the rebirth of the broker.

Concorde Capital, a Ukrainian firm, has seen an opportunity to market Forex Trend’s clients, announcing that it will launch a new brokerage with preferred terms. However, this is still a work in process and not yet a concrete solution.

Hedge Fund or Broker?

Just as in the case of EXANTE, there is a disagreement between the company and the SEC with regards to the responsibility for the alleged insider trading. While the SEC refers to the firm as a hedge fund, implying that it trades itself, the company says that it’s their clients trading.

Speaking with Finance Magnates about the situation, the firm responded: “Concorde Capital Group is one of the largest operators in the investment market of Ukraine, we serve hundreds of clients who invest and conduct their transactions around the world, including in the United States.

Obviously, some of these transactions have appeared suspicious. At the moment, we understand the situation and are conducting an internal investigation. We are totally open and will facilitate an official investigation.”

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