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(Reuters) - U.S. authorities have secured a guilty plea in a first-of-its-kind criminal case against a Canadian man accused of manipulating stock prices through an illicit, high-speed trading strategy.
Aleksandr Milrud, 50, pleaded guilty to conspiring to commit securities fraud on Thursday in federal court in Newark, New Jersey, for orchestrating a so-called "layering" or "spoofing" scheme that netted $1.9 million in profits.
"Mr. Milrud has accepted responsibility for his conduct and looks forward to putting this matter behind him," Michael Bachner, his lawyer, said in an email Monday.
Milrud, a Canadian citizen who resides in Ontario, Canada, and Aventura, Florida, faces up to 4-3/4 years in prison under federal sentencing guidelines, Bachner said.
Milrud, who in court papers describes himself as a day trader, is scheduled to be sentenced Dec. 16.
A spokesman for New Jersey U.S. Attorney Paul Fishman, whose office brought the case, had no immediate comment.
The plea came in the first federal securities fraud prosecution involving layering, or spoofing, where traders place and then quickly cancel orders to create a false impression of demand.
The case, announced in January, came after the publication of Michael Lewis's 2014 bestseller "Flash Boys," which contended the markets were rigged in favor of high-speed traders and prompted debate over the fairness of the U.S. stock markets.
Prosecutors said Milrud recruited a network of overseas traders in South Korea and elsewhere to engage in layering and other illegal strategies in exchange for a cut of the resulting trading profits.
Prosecutors said Milrud's traders used a specialized computer program to identify stocks including Baxter International Inc with high-trading volume to facilitate their fast-paced layering scheme and to avoid detection.
While profits on individual traders were low, just $20 to $100 each, prosecutors said the repeated, fast-paced trading was done hundreds of times a day, resulting in more than $1.9 million in profits.
Milrud's case came after authorities in October 2014 announced the first criminal case over spoofing, bringing commodities fraud and other charges against high-frequency trader Michael Coscia.
More recently, the U.S. Justice Department in April brought charges including commodities fraud against London-based day-trader Navinder Sarao for engaging in a market manipulation scheme involving spoofing that contributed to the May 2010 "flash crash."
Both those cases are still pending.
The Milrud case is U.S. v. Milrud, U.S. District Court, District of New Jersey, No. 15-cr-00455.
Reporting by Nate Raymond in New York; Editing by Frances Kerry