Order Based Manipulation involves orders, sometimes but not always accompanied by trades. The point manipulation is designed to give other market participants a false signal about the security’s demand or supply.
According to statements made in court, Taub defrauded the United States by hiding the identities of those who actually controlled the straw accounts, and who reaped the majority of the profits from the scheme, from the brokerage firms and the IRS. As a result, the profits from the straw accounts were taxed at the lower tax rates applicable to the straw account holders instead of the higher tax rates applicable to Taub, which allowed Taub to avoid $394,424 in taxes.
Securities fraud carries a maximum potential penalty of 20 years in prison and a $5 million fine. Conspiracy to defraud the United States carries a maximum potential penalty of 5 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Under the terms of the plea agreement, if accepted by the court, Taub will receive a sentence of 18 months in prison, will forfeit $17.1 million, and will be ordered to pay restitution in the amount of $394,424 to the IRS.
