2025-12-16 sec-litreleases complaint 222 KB 140 chars

SEC v. Artur Khachatryan, Central District of California (Dec. 16, 2025) — Complaint

raw: 1.Between January 2022 and January 2024 (the “relevant period”),

1.Between January 2022 and January 2024 (the “relevant period”), (Dec. 16, 2025)

Caption: SEC v. Artur Khachatryan

Enriched metadata

Scheme: market-manipulation (99%)
Court: Central District of California
Victim loss: $373,885
Entity: Artur Khachatryan

Classified market-manipulation(confidence 99%). EDGAR detection: forms SC 13D/G/13F· recall 53% / precision 9%. detection rule →

Extracted insights

Entities 5

scheme_term a manipulative stock trading scheme known as spoofing
person artur khachatryan
agency Securities and Exchange Commission
scheme_term spoofing after being warned by a broker-dealer about manipulation
scheme_term that spoofing was illegal

Triples 10

Artur Khachatryan engaged in a manipulative stock trading scheme known as spoofing
Artur Khachatryan placed non-bona fide spoof orders to manipulate stock prices
Artur Khachatryan executed bona fide orders at manipulated prices for profit
Artur Khachatryan generated $373,885 in ill-gotten gains
Artur Khachatryan used accounts in the names of friends and relatives to continue trading
Artur Khachatryan filled out account opening documentation for others while misrepresenting himself as the trader
Artur Khachatryan knew or was reckless in not knowing that spoofing was illegal
Artur Khachatryan continued spoofing after being warned by a broker-dealer about manipulation
Artur Khachatryan made material misrepresentations to broker-dealers about account ownership
Securities And Exchange Commission alleges that Artur Khachatryan violated Sections 17(a)(1), (2), and (3) of the Securities Exchange Act

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1.Between January 2022 and January 2024 (the “relevant period”), · Source

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SARA D. KALIN (Cal. Bar No. 212156)
Email: [email protected]

Attorney for Plaintiff
Securities and Exchange Commission

Joseph G. Sansone, Chief (Market Abuse Unit)
New York Regional Office
100 Pearl Street, Suite 20-100
New York, New York 10004-2616

Brent Wilner, Associate Regional Director
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

vs.

ARTUR KHACHATRYAN,

Defendant.

Case No.

COMPLAINT

Jury Trial Demanded

Plaintiff Securities and Exchange Commission (“SEC”) alleges:

SUMMARY
1. Between January 2022 and January 2024 (the “relevant period”),

Defendant Artur Khachatryan (“Khachatryan” or “Defendant”) engaged in a

manipulative stock trading scheme known as spoofing. He placed non-bona fide

“spoof” orders that he did not intend to execute for the purpose of manipulating stock

prices, and also placed bona fide orders that he did execute at the resulting

manipulated prices for a profit. By repeating this pattern in his own accounts and in

25-cv-11863

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 1 of 17 Page ID #:1

the accounts of friends and relatives, Khachatryan generated approximately $373,885

in ill-gotten gains.

2. Khachatryan’s scheme involved trading outside of regular market hours

when the market was very thinly traded. This made it easier to artificially move the

prices of securities in a direction of his choosing by rapidly placing non-bona fide

“spoof” orders on one side of the market, then executing bona fide orders on the

opposite side of the market at prices that benefitted from the artificial price

movement he had created. After his bona fide orders were executed, he would

quickly cancel his non-bona fide spoof orders. The practice of spoofing is recognized

as an illegal, fraudulent scheme and a form of market manipulation.

3. Khachatryan’s scheme also involved using accounts in the names of

other people because his manipulative trading triggered account restrictions and/or

closings at the broker-dealers he used. To continue his trading, Khachatryan opened

accounts at multiple broker-dealers in the names of other people and used the existing

accounts of friends and family. In some instances, he filled out and electronically

signed all of the account opening documentation for accounts in the names of others,

misrepresenting to broker-dealers that the named individuals would be trading when,

in fact, he knew that he would be the only person trading in those accounts.

4. Khachatryan knew or was reckless in not knowing that his spoofing was

illegal. Prior to the relevant period, he confirmed in an email to a broker-dealer that

he understood that placing orders with the intent to cancel could be considered

manipulation. He also continued to use spoofing even after a broker-dealer

specifically told him in late 2022 that it was restricting his account because the series

of orders he had placed had “achieved a guaranteed profit quote manipulation” and

that the firm “never allows this kind of manipulating [sic] activities.”

5. Khachatryan also knew or was reckless in not knowing that he was

making material misrepresentations to broker-dealers when he filled out and

electronically signed account opening paperwork pretending to be someone else and

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 2 of 17 Page ID #:2

obscuring the fact that he would be trading in the accounts.

6. By engaging in the conduct alleged in this complaint, Defendant violated

Sections 17(a)(1), (2), and (3) of the Securities Act of 1933 (“Securities Act”) [15

U.S.C. §§ 77q(a)(1), (2), and (3)], and Sections 9(a)(2) and 10(b) of the Securities

Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78i(a)(2) and 78j(b)], and

Rules 10b-5(a), (b), and (c) thereunder [17 C.F.R. §§ 240.10b-5(a), (b), and (c)]. The

SEC seeks a permanent injunction, a conduct-based injunction, disgorgement of ill-

gotten gains plus prejudgment interest, and a civil penalty against Khachatryan.

JURISDICTION AND VENUE
7. The Court has jurisdiction over this action pursuant to Sections 20(b),

20(d), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)], and

Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and

78aa].

8. Defendant, directly or indirectly, made use of the means or

instrumentalities of interstate commerce, of the mails, or of the facilities of a national

securities exchange in connection with the transactions, acts, practices, and courses of

business alleged in this complaint.

9. Venue is proper in this district pursuant to Section 22(a) of the Securities

Act [15 U.S.C § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa],

because certain of the transactions, acts, practices, and courses of conduct

constituting violations of the federal securities laws occurred within this district. In

addition, venue is proper in this district because Khachatryan resides in this district.

THE DEFENDANT
10. Artur Khachatryan, age 41, resides in Tujunga, California.

Khachatryan received an MD from the University of Nevada in spring 2023. He

holds an active Physician Training License in Colorado and worked as a medical

resident in Denver until January 2024, when he moved to the Los Angeles area.

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 3 of 17 Page ID #:3

TERMS USED IN THIS COMPLAINT
11. Spoofing refers to a type of market manipulation scheme where a trader

enters non-bona fide orders to create a false appearance of new or increased trading

interest in the security. Spoofers induce others to place orders priced at or better than

the spoofer’s non-bona fide orders. Spoofing creates artificial market conditions that

benefit the spoofer’s interests while harming other market participants.

12. Regular market hours refers to the period of time when the U.S. markets

are open: Monday through Friday, from 9:30 a.m. to 4:00 p.m. Eastern Standard

Time, with the exception of certain holidays. The U.S. markets also allow for

extended hours trading, the periods directly before the stock markets open and right

after they close and which hours vary per market.

13. National Best Bid is the highest reported price a buyer is willing to pay

to buy a security.

14. National Best Offer is the lowest reported price that a seller is willing to

accept to sell a security.

15. NBBO. The spread between the National Best Bid and the National Best

Offer is referred to as the “NBBO.” The NBBO is publicly reported to the market

and represents the tightest bid-ask spread for a particular security.

16. Midpoint. The midpoint price of a security is defined as the average of

the NBB and the NBO.

17. Thinly traded securities are securities that have low trading volume. As

compared to more actively traded securities with a greater trading volume, thinly

traded securities often have fewer interested buyers and sellers and larger NBBO

spreads. Thus, a small number of orders or trades can significantly impact the market

price of thinly traded securities, rendering them more susceptible to manipulation

than securities that are more actively traded.

18. Limit orders are orders to buy or sell a security at a specified price or

better and can only be executed if the market price reaches the limit price. A buy

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 4 of 17 Page ID #:4

limit order can only be executed at the limit price or lower, and a sell limit order can

only be executed at the limit price or higher. While limit orders do not guarantee

execution, they help ensure that an investor does not pay more than or sell for less

than a pre-determined price.

THE ALLEGATIONS
A. Background

19. In or around summer 2021, Khachatryan was using an account he had at

a registered broker-dealer, “BD 1,” and started using a strategy he referred to as “fast

trading.” His fast trading involved buying and selling stock quickly enough to take

advantage of small market movements.

20. Initially, Khachatryan did his fast trading during regular market hours,

but because he was busy with medical school, he tried trading before and after regular

market hours. He realized that trading outside of regular market hours was more

profitable.

21. By July 2021, he was fast trading mainly outside of regular market

hours. He also increased the number of orders he was entering on a daily basis,

sometimes entering as many as 3,000 orders per day.

22. In late July 2021, BD 1 began sending him warnings about potentially

manipulative trading. Khachatryan continued trading and had multiple phone calls

with BD 1 representatives.

23. On August 24, 2021, BD 1 restricted Khachatryan’s account and a

representative told him the firm had made the decision to close his account.

24. On September 2, 2021, Khachatryan wrote an email to BD 1 asking the

firm to let him continue trading. The email stated in part, “…I have read and

understand the SEC rules regarding order cancellations (ie [sic], putting on orders

with intent to cancel without getting filled) and how this is considered market

manipulation.” It also stated, “I am now fully aware that this type of trading is not

allowed and will refrain from it.”

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 5 of 17 Page ID #:5

25. BD 1 did not allow Khachatryan to continue trading and closed his

account.

B. Khachatryan’s Spoofing Scheme
26. After BD 1 closed Khachatryan’s account, he began using an existing

account he had another registered broker-dealer, “BD 2.”

27. During fall 2021, Khachatryan became familiar with BD 2’s trading

platform, and had multiple phone calls with the firm’s customer service

representatives to learn the attributes of its trading system and to ensure that he had

access to current market data.

1. Khachatryan’s Manipulative Trading
28. In January 2022, Khachatryan began his manipulative spoofing scheme,

which involved trading in high-priced stocks and worked as follows.

29. First, he traded almost exclusively outside of regular market hours.

Even stocks that are heavily traded during regular market hours are often thinly

traded outside of those hours. This results in a larger NBBO – the difference between

the National Best Offer and the National Best Bid. Fewer market participants and a

wider NBBO provide more opportunity to artificially move stock prices.

30. Second, Khachatryan rapidly placed a series of visible limit orders for a

particular stock on one side of the market within the NBBO that he did not intend to

execute. These non-bona fide “spoof” orders were layered and incrementally

narrowed the NBBO in a direction of his choosing, creating a false appearance of

new or increased trading interest in the stock.

31. Third, he placed aggressively priced bona fide orders on the opposite

side of the market within the new, narrower NBBO and slightly away from his non-

bona fide “spoof” orders. Unlike his visible non-bona fide limit orders,

Khachatryan’s bona fide orders did not impact the National Best Bid or the National

Best Offer because they were typically executed instantaneously and not posted on a

market data feed.

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 6 of 17 Page ID #:6

32. Fourth, once he received the desired executions, he quickly canceled his

non-bona fide spoof orders – often with a hotkey that canceled all outstanding orders

at the same time. This usually triggered an immediate return to the wider, true

market NBBO that had existed prior to Khachatryan placing non-bona fide “spoof”

orders.

33. Khachatryan then repeated the same spoofing scheme on the other side

of the market to lock in his profits.

34. Khachatryan’s manipulative trading scheme allowed him, for example,

to buy at a low price and quickly sell at a high price; then short-sell at a high price

and quickly buy at a low price to cover his short position. He would repeat this

pattern for many cycles, continuing to profit as a result of his stock price

manipulation.

35. Here is one specific example of how Khachatryan’s scheme worked. On

January 6, 2022, the common stock of a U.S.-listed company “Company A,” did not

experience an NBBO spread larger than $1.25 during regular market hours, and its

average NBBO spread was $0.17. But that night, at about 3:30 a.m. Pacific Time

(“PT”) when Khachatryan began trading this stock, the NBBO was approximately

$24 per share.

36. At 3:32 a.m. PT, the National Best Bid for Company A stock was

$198.99 per share and the National Best Offer was $223.02 per share.

37. At 3:33 a.m. PT, Khachatryan began placing non-bona fide “spoof”

orders to buy Company A stock at prices increasing from $204.66 to $214.69. This

effectively pushed up the midpoint price for Company A from $211.01 to $218.89.

It also moved the National Best Bid from $198.99 to $208.20 per share.

38. Then he began entering bona fide short-sell orders around the artificial

NBB price he had just established. These short-sell orders were quickly executed at

prices between about $208 and $215 per share.

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 7 of 17 Page ID #:7

39. Just before 3:35 a.m. PT, Khachatryan canceled his non-bona fide buy

orders.

40. In order to profit, Khachatryan had to cover the shares he had sold short

for prices below $208 to $215, so he started the spoofing process on the opposite side

of the market to depress the price.

41. A little after 3:35 a.m. PT, he began entering non-bona fide spoof orders

to sell Company A stock at prices decreasing from about $214 to $205. This

effectively pushed down the NBO, and he executed buy orders between about $205

and $208 per share, which he used to cover his short sales at a profit.

42. In January 2022, Khachatryan repeated this pattern over and over again,

resulting in an average of 3,456 orders per day in his BD 2 account, almost all of

which were outside of regular market hours. That month, he made average trading

profits of about $16,000 per day in the same account.

2. Khachatryan Trades in the Accounts of Others
43. In early January 2022, Khachatryan suggested to his friend, Person A,

that he also open an account at BD 2. Person A began the account opening process,

and his account was able to trade by mid-January.

44. Person A also spoke with his friend, Person B, who wanted to make an

investment. Person A suggested that Person B allow Khachatryan to trade in Person

B’s account to generate trading profits. Person B went on to tell two of his friends

the same thing.

45. Between January and March 2022, Person B and his two friends opened

accounts at BD 2.

46. After Khachatryan engaged in his spoofing scheme for about six weeks,

BD 2 restricted his account on February 14, 2022. By that time, Persons A and B had

active accounts, and Khachatryan used them to continue trading.

47. In February and March, Person B’s two friends activated their own BD 2

accounts that Khachatryan also used to trade.

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 8 of 17 Page ID #:8

48. One by one, each of the accounts listed above was restricted by BD 2

due to Khachatryan’s trading.

49. By May 2022, all of the accounts had been restricted, but Khachatryan

had generated $268,674 in illegal profits from his manipulative trading.

3. Khachatryan Opens and Trades in Accounts in the Name of a Close
Relative

50. In October 2022, Khachatryan opened accounts at BD 1 and BD 2 in the

name of a close relative (“Relative One), and with her permission. Khachatryan

opened the accounts in Relative One’s name because his own accounts had been

closed at these firms and he did not think they would allow him to open other

accounts in his own name.

51. In early November 2022, Khachatryan began simultaneously trading in

both of Relative One’s accounts using the same manipulative spoofing scheme he had

used earlier that year. His manipulative trading generated $57,764 in profits.

52. Despite the representation he had made to BD 1 in summer 2021 that he

understood “… the SEC rules regarding order cancellations (ie [sic], putting on

orders with intent to cancel without getting filled) and how this is considered market

manipulation,” the trading in Relative One’s account involved placing non-bona fide

spoof orders that he canceled as soon as his bona fide orders were filled.

53. Within a few weeks, BD 1 and BD 2 had each restricted or closed the

accounts Khachatryan opened in Relative One’s name.

4. Khachatryan Moves His Trading to a New Broker-Dealer
54. About two days after Relative One’s accounts had been shut down,

Khachatryan began trading in an account he had in his own name at a third registered

broker-dealer, “BD 3.”

55. Around the same time, he opened a BD 3 account in another family

member’s name (“Relative Two”), with her permission.

56. Between November 30 and December 6, 2022, Khachatryan made

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 9 of 17 Page ID #:9

$15,496 in his own BD 3 account as a result of his manipulative spoofing scheme.

57. BD 3 quickly restricted Khachatryan’s account and sent him the

following message on December 15, 2022:

Your account is currently restricted due to potential quote manipulation
activities in the past 2 weeks. The series of orders that you placed to
buy/sell, as well as cancellations between these orders are pushing the
quote up and down and have achieved a guaranteed profit quote
manipulation. Please be aware that our platform never allows this kind
of manipulating activities. If you have any questions about it, please
contact us and explain your trading strategy. [sic]

58. Despite BD 3’s specific admonition to Khachatryan, he used the same

manipulative spoofing scheme in the BD 3 account he opened in Relative Two’s

name, making $31,951 in profits between November 24, 2023 and February 2, 2024.

C. Khachatryan’s Misrepresentations to Broker-Dealers
59. In addition to engaging in a manipulative trading scheme, Khachatryan

provided materially false information on account opening forms he submitted to

multiple broker-dealers. He opened accounts in the names of Relative One and

Relative Two indicating that the accounts would be under their control and for their

exclusive use, but Khachatryan knew that he would be the person controlling and

trading in the accounts.

60. Khachatryan’s own accounts had been restricted or closed at BD 1, BD

2, and BD 3, and he opened accounts in the names of Relative One and Relative Two

because he knew it was unlikely the firms would allow him to trade again.

61. On October 30, 2022, Khachatryan submitted account opening forms in

the name of Relative One to BD 1.

62. On October 31, 2022, Khachatryan submitted account opening forms in

the name of Relative One to BD 2.

63. During the online account opening process for these accounts,

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 10 of 17 Page ID #:10

Khachatryan presented himself as Relative One by entering her personal information

and electronically signing her name. He also failed to identify himself as someone

who would be trading in the account or even as an authorized user.

64. On BD 2’s required account opening form entitled, “Certification

Regarding Trading Control and Ownership of Account,” BD 2 asked for a specific

representation that the person signing the form was the only person who would be

trading in the account. Khachatryan electronically signed Relative One’s name even

though he knew he would be the only person trading in the account.

65. On December 8, 2022, Khachatryan submitted account opening forms in

the name of Relative Two to BD 3. During the account opening process, he

presented himself to the firm as though he was Relative Two, by filling out the online

application with her information, electronically signing her name, and failing to

identify himself as an authorized user or as someone associated with the account even

though he knew he would control and trade in the account.

FIRST CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale of Securities

Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c)
66. The SEC realleges and incorporates by reference paragraphs 1 through

65 above.

67. As set forth above, Defendant Khachatryan perpetrated a scheme to

fraudulently manipulate the prices of securities and conducted his spoofing scheme

outside of regular market hours when the securities were thinly traded and more

susceptible to manipulation. He placed multiple non-bona fide spoof orders on one

side of the market to move the prices of securities in a direction that benefitted him,

then executed bona fide orders on the other side of the market to profit from the price

movement and canceled his spoof orders. He knew, or was reckless in not knowing,

that this type of trading was illegal because, among other things, he began his

manipulative spoofing scheme after acknowledging to BD 1 that he understood that

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 11 of 17 Page ID #:11

placing orders with the intent to cancel was considered market manipulation.

Khachatryan also acted with scienter because when accounts in his own name were

restricted or closed, he continued his fraudulent trading using accounts in the names

of others.

68. By virtue of the foregoing, Khachatryan directly or indirectly, by the use

of means or instruments of interstate commerce, or of the mails or of a facility of a

national securities exchange, in connection with the purchase or sale of a security:

(a) Employed one or more devices, schemes or artifices to defraud;

and

(b) Engaged in acts, practices, or courses of business which operated

or would operate as a fraud or deceit upon others.

69. By virtue of the foregoing, Khachatryan violated and, unless restrained

and enjoined, will again violate, Section 10(b) of the Exchange Act [15 U.S.C. §

78j(b)] and Rules 10b-5(a) and (c) [17 C.F.R. §§ 240.10b-5(a), (c)] thereunder.

SECOND CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale of Securities

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b)
70. The SEC realleges and incorporates by reference paragraphs 1 through

65 above.

71. As set forth above, Defendant Khachatryan made material

misrepresentations to broker-dealers when he filled out and signed account opening

paperwork, falsely representing himself as Relative One and Relative Two. The

misrepresentations were material because the broker-dealers would have wanted to

know that the person using the account was Khachatryan – an individual whose

accounts they had restricted or closed. Khachatryan made the misrepresentations

with scienter because he opened the accounts in the names of others to deceive

broker-dealers that would not let him open another account in his own name. The

misrepresentations were in connection with the purchase or sale of securities because

Case 2:25-cv-11863 Document 1 Filed 12/16/25 Page 12 of 17 Page ID #:12

Khachatryan used the accounts he opened to purchase and sell securities.

72. By virtue of the foregoing, Khachatryan directly or indirectly, by the use

of means or instruments of interstate commerce, or of the mails or of a facility of a

national securities exchange, in connection with the purchase or sale of a security,

made untrue statements of a material fact or omitted to state a material fact necessary

in order to make the statements made, in light of the circumstances under which they

were made, not misleading.

73. By virtue of the foregoing, Khachatryan violated and, unless restrained

and enjoined, will again violate, Section 10(b) of the Exchange Act [15 U.S.C. §

78j(b)] and Rule 10b-5(b) [17 C.F.R. §§ 240.10b-5(b)] thereunder.

THIRD CLAIM FOR RELIEF
Manipulation of Security Prices

Violation of Section 9(a)(2) of the Exchange Act
74. The SEC realleges and incorporates by reference paragraphs 1 through

65 above.

75. As set forth above, Defendant Khachatryan perpetrated a scheme to