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September 16, 2019

Heraeus Metals New York LLC and its employee John Lawrence have been ordered by the CFTC to pay a total of $1.03 million for their actions in spoofing orders for precious metals futures.  Between 2017 and 2018, Lawrence placed hundreds of large orders in the COMEX silver and gold futures markets with the intent to cancel the orders before execution.  Lawrence intended that these larger spoofed orders would attract market participants to fill smaller, genuine, orders that he had also placed.  CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations,

September 12, 2019

Ronald Hardy and Dennis Verdosa, both formerly associated with Power Traders Press and My Street Research, were sentenced to, respectively, 10 years and 6 years in prison following their 2018 guilty pleas for their roles in a "boiler room" operation that defrauded investors, many elderly, of $147 million.  Defendants artificially inflated the price and trading volume of stock in certain publicly-traded companies, and misrepresented the advisability of purchasing the stock and its potential profitability to victim investors.  The defendants often themselves held interests in the companies, and profited when their victims lost.   USAO EDNY

Tagged in: Criminal Proceedings, Financial and Investment Fraud, Market Manipulation and Trading Violations, Misrepresentations, Securities Fraud,

September 9, 2019

The CFTC has simultaneously filed a complaint and settled charges against a CFTC registrant, Nathan Harris, who was charged with committing fraud, trading without authorization, and violating speculative position limits in live cattle futures contracts between 2012 and 2014.  Harris has been ordered to pay $1.25 million for causing customer losses of $10.3 million.  CFTC

Tagged in: Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations,

August 15, 2019

Kraft Foods Group and Mondalēz Global LLC have been ordered to pay a $16 million penalty for allegedly manipulating the wheat market in the summer of 2011.  Defendants’ orders for wheat futures contracts worth $90 million resulted in false demand signals, and accomplished the actual goal of defendants, which was to narrow the price spread on wheat futures, and lower cash wheat prices.  Defendants were able to earn more than $5 million in profits.  CFTC

Tagged in: Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations,

July 18, 2019

Swapnil Rege, who worked as a portfolio manager for a hedge fund that operated as a commodity pool operator, was been ordered by the CFTC  and SEC to pay a $100,000 civil penalty and disgorge a $600,000 performance bonus he received as a result of his fraudulent mismarking the valuations of interest rate swaps.  The mismarking, accomplished through various means, artifically inflated the profitability of his trades, earning him a larger performance bonus.  SEC, CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations, Misrepresentations, Securities Fraud,

June 25, 2019

Merrill Lynch Commodities, Inc. (MLCI) has agreed to pay $25 million for spoofing and manipulating the precious metals market on the Commodity Exchange from 2008 to 2014.  In the non-prosecution agreement signed with DOJ, MLCI admitted that its employees had placed thousands of fraudulent orders to create a false sense of demand and induce other market participants to make purchases or sales.  CFTC, DOJ

Tagged in: Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations, Misrepresentations,

February 15, 2019

Following his conviction at trial for securities fraud and related charges, attorney James M. Schneider of Boca Raton, Florida, was sentenced to seven years in prison and ordered to pay restitution of $19.7 million to over 2,000 investors.  From 2008 to 2013, Schneider and his co-conspirators created approximately 20 shell companies, falsely representing their ownership and control in SEC filings before offering their securities for sale.  The conspirators would then use the shell company shares in pump-and-dump and other manipulation schemes.  USAO SD FL

Tagged in: Criminal Proceedings, Financial and Investment Fraud, Market Manipulation and Trading Violations, Misrepresentations, Regulatory Violations, Securities Fraud,

January 28, 2019

Jiongsheng (“Jim”) Zhao, of Sydney, Australia, a commodities trader at an Australian proprietary trading firm (Trading Firm A), pleaded guilty to spoofing in connection with his fraudulent and deceptive trading activity in the E-mini S&P 500 futures contracts market on the Chicago Mercantile Exchange (CME). Zhao admitted that from approximately July 2012 through March 2016, he placed thousands of orders for E-mini S&P 500 futures contracts on the CME that he intended to cancel before execution to artificially move the price of E-mini S&P 500 futures contracts in a direction that was favorable to Zhao to the detriment of other market participants. Trading Firm A kept a percentage of Zhao’s trading profits, ranging at various times from 20 percent to 50 percent. DOJ

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Market Manipulation and Trading Violations,

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