The CFTC permanently banned a former trader from trading commodity interests for engaging in “spoofing” and other manipulative trading practices. The CFTC found that from at least 2009 to 2012, the trader repeatedly placed orders for precious metals futures that he had no intention of executing. The trader allegedly placed these orders to create a false appearance of market interest, which prompted other market participants on the opposite side of the market to buy and sell such contracts.
Additionally, the CFTC found that the trader, acting in concert with other traders, executed other trades to manipulate precious metals futures contracts in order to activate customers’ stop-loss orders. Such “stop-loss manipulation,” according to the CFTC, allowed the traders to buy futures contracts at artificially low prices or sell them at artificially high prices.
CFTC Director of Enforcement James McDonald commented on the ban as well as the trader’s cooperation:
“Today’s enforcement action demonstrates that the Commission will aggressively pursue individuals who manipulate and spoof in our markets. Today’s action also shows that while holding individuals accountable for their conduct, the Commission will give meaningful cooperation credit to those who acknowledge their own wrongdoing, enter into a Cooperation Agreement and provide substantial assistance to the Division in its investigations and enforcement actions against others who have engaged in illegal conduct.”
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[Copyright By Cadwalader, Wickersham & Taft LLP]