ISSN 2330-717X

Bulgaria Arrests Suspected Wall Street Fraudster

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By Mariya Cheresheva

Authorities in Bulgaria have arrested a Bulgarian citizen who faces extradition to the US in connection with a $400-million market manipulation scheme, involving stocks of Avon Products and Rocky Mountain Chocolate Factory.

US prosecutors say Nedko Nedev, 38, who has dual Bulgarian-US citizenship, launched fake takeover bids to drive up the share prices of the two companies to make a profit.

He is also accused of insider trading over an offer by a Bulgarian insurer, Euroins, to acquire the US-based company Tower Group.

He is charged on six accounts of fraud, each carrying a maximum sentence of 20 years in prison, and two other charges of aggravated identity theft, which carry a mandatory sentence of two years each.

“Nedev engaged in elaborate schemes to manipulate the market in various publicly traded securities,” US attorney Preet Bharara said.

“If you manipulate the US securities markets with disinformation and deception, whether from New York or from Bulgaria, as Nedev is alleged to have done, you will be held to account,” he added.

The US Commission of Financial Securities, SEC, filed a complaint against the trader in June 2015 when his case gained broad publicity as the “Avon Hoax”.

On May 14, 2015, through an entity named PTG Capital Partners LTD, Nedev filed a tender offer for Avon on the SEC public Edgar batabase, falsely stating that it had proposed to acquire all of Avon’s stock at about 181 per cent above the stock’s closing price on May 13.

As a direct result, Avon’s share price increased by about 20 per cent in а day, from which the trader made a profit of around $5,000 US.

Prosecutors say the Avon hoax is not the first fraudulent scheme the Bulgarian was involved in. According to the charges, he used a similar model in 2012, when he caused the shares of Rocky Mountain to rise by 4.6 per cent through a sham tender offer.

According to the charges of illegal insider trading, Nedev advised the Bulgarian Euroins Insurance Group, a unit of EuroHold Bulgaria AD, to acquire Tower Group, after he had accumulated about 385,000 Tower shares in 2013 and 2014.

Balkan Insight

Balkan Insight

The Balkan Insight (fornerkt the Balkin Investigative Reporting Network, BIRN) is a close group of editors and trainers that enables journalists in the region to produce in-depth analytical and investigative journalism on complex political, economic and social themes. BIRN emerged from the Balkan programme of the Institute for War & Peace Reporting, IWPR, in 2005. The original IWPR Balkans team was mandated to localise that programme and make it sustainable, in light of changing realities in the region and the maturity of the IWPR intervention. Since then, its work in publishing, media training and public debate activities has become synonymous with quality, reliability and impartiality. A fully-independent and local network, it is now developing as an efficient and self-sustainable regional institution to enhance the capacity for journalism that pushes for public debate on European-oriented political and economic reform.

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