On June 15, 2022, the United States Court of Appeals for the Second Circuit affirmed the amended final judgment entered on February 9, 2021 by the United States District Court for the Southern District of New York against Vali Management Partners, DBA Avalon FA LTD and its principals, Nathan Fayyer and Sergey Pustelnik. The district court had ordered each defendant to pay $7.5 million in penalties following a jury verdict finding the defendants liable for engaging in market manipulation in violation of the Securities Act of 1933, the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

On November 12, 2019, following a three-week trial, the jury found that the defendants had engaged in two manipulative trading schemes: (1) layering or spoofing, a trading practice which involved placing and canceling orders to trick others into buying or selling stocks at artificial prices, and (2) cross-market manipulation, which involved buying or selling stocks to artificially impact options prices. These schemes generated more than $25 million in illicit proceeds. The defendants conducted their manipulative schemes through Lek Securities Corp., a New-York based brokerage firm, where Pustelnik was also a registered representative. Lek Securities and its Chief Executive Officer, Sam Lek, settled with the SEC prior to trial.

The district court's amended final judgment permanently enjoined the defendants from future violations of Sections 9(a)(2) and 10(b) of the Exchange Act, Rule 10b-5 promulgated thereunder, and Section 17(a) of the Securities Act and ordered each defendant to pay $7.5 million in civil penalties.

The Second Circuit's summary order rejected all of the arguments raised by the defendants on appeal. The Second Circuit overruled the defendants' arguments that the district court gave an improper instruction to the jury on market manipulation, that the court erred in admitting the testimony of the SEC's expert witnesses while excluding defendants' expert witness, and that the court awarded excessive and improper civil penalties.

The appeal was handled by Kerry J. Dingle and supervised by Michael A. Conley and Dominick V. Freda. The district court litigation and trial were conducted by David J. Gottesman, Olivia S. Choe and Sarah S. Nilson. The SEC's investigation was conducted by Ms. Nilson and Owen A. Granke, and was supervised Melissa R. Hodgman and Carolyn Welshhans.