World Economy

Mexico Fines Steel Company for Wash Trades

Industrias CH was fined $159,764  in November.Industrias CH was fined $159,764  in November.

Mexico’s securities regulator has imposed one of its biggest fines ever for market manipulation on steel company Industrias CH, owned by billionaire Rufino Vigil Gonzalez, government data showed.

Industrias CH was fined 2.96 million pesos ($159,764) at the end of November for making “prohibited trades” under a law banning simulating price or volume, or effectively trading with itself, according to publicly available data on the website of Mexican banking and securities regulator CNBV, CNBC reported.

Industrias CH investor relations manager Jose Luis Tinajero and subsidiary Simec were also fined, and the database entries for their fines were more specific, citing “various buy and sell trades that constituted simulation trades in terms of traded volume.”

Such trades, known as “wash trades” in other markets, are a tactic in which an investor buys and sells a security at the same time to create the illusion of greater demand.

Providing limited details on its website, the CNBV did not explain why the company was simulating trading volume or how it determined the trades were problematic. It did not respond to questions submitted by Reuters for clarification.

Tinajero and Industrias CH and Chief Executive Sergio Vigil Gonzalez, who is also Rufino’s brother, declined to make any comment about the CNBV fines. A spokesperson for the CNBV told Reuters that it could not comment on the case before the period for appeals concluded. Reuters could not determine if the companies were appealing.

The Industrias CH fine is the largest of 19 fines given out since 2014 under the manipulation article of Mexico’s market law, according to a Reuters review of the data. A new law took effect in 2014.

Add new comment

Read our comment policy before posting your viewpoints