A $50 Million Stock-Fraud Probe, Six Defendants, and a Picasso

U.S. prosecutors lifted the veil on a $50 million international stock-manipulation scam that got shut down after the alleged culprits suggested to an undercover FBI agent that they buy a Picasso to launder illicit profits.

It’s the “only market that is unregulated,” one of the alleged wrongdoers boasted in a conversation that was secretly recorded, U.S. prosecutors alleged in an indictment filed in federal court Brooklyn, N.Y., against six people.

The indictment, filed under seal Feb. 28, was unsealed March 1 in the U.S. District Court for the Eastern District of New York.

The ill-fated art deal was just ...