Archive

December 21, 2018

Randall Gilbertson was sentenced to 12 years in prison following his conviction on numerous counts related to his manipulation of the stock price of Dakota Plains Holdings, Inc., a company he founded, in a reverse merger of Dakota Plains into a publicly traded shell company, Malibu Club Tan.  Gilbertson was also ordered to pay restitution of over $15 million.   USAO MN

October 17, 2018

Two individuals formerly employed by Deutsche Bank, Matthew Connolly and Gavin Campbell Black, have been convicted of conspiracy and wire fraud for their roles in the manipulation of the London Interbank Offered Rate (LIBOR).  Connolly was the supervisor of Deutsche Bank’s Pool Trading Desk in New York; Black was a derivatives trader in London. In 2015, Deutsche Bank paid a $775 million fine for its role in the LIBOR manipulation scheme.  DOJ

October 12, 2018

Former commodity traders Yuchun "Bruce" Mao, Kamaldeep Gandhi, and Krishna Mohan have been charged with commodities fraud and spoofing in a scheme that cost investors on the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT) over $60 million in losses. Over the course of two years, the three allegedly placed thousands of orders and canceled them before execution in order to drive up demand. When defendant Gandhi moved onto another firm, he allegedly continued placing spoof orders. Along with defendant Mohan, Gandhi has agreed to plead guilty to the charges; no word yet on how Mao will plead. CFTC; DOJ; USAO SDTX

October 11, 2018

Thomas C. Lindstrom, an options trader at Rock Capital Markets, LLC during the relevant time period, was permanently enjoined from trading or registering, in settlement of fraud charges against him.  Lindstrom, who was charged in 2016, engaged in trading activity which had the effect of falsely inflating the value and profitability of his options position, and misrepresented to his employer the quantity of options and the risk associated with his position. Lindstrom purchased thousands of deep out-of-the-money options, which settled each day at a minimum tick value prior to expiration, creating the appearance of millions of dollars in profits. He then purchased more out-of-money options to conceal the losses when the phony profits were wiped out.  CFTC

October 3, 2018

The SEC froze the assets of U.K. citizen Roger Knox and the Swiss-based company Wintercap SA based on their role in a scheme that generated more than $165 million of illegal sales of stock in at least 50 microcap companies.  The parties are alleged to have helped securities holders conceal their stock ownership and to have provided anonymous access to brokerage accounts to sell the shares in the U.S. market. Knox allegedly helped facilitate pump-and-dump and other market manipulation schemes by selling massive quantities of microcap securities on behalf of the concealed shareholders, and simultaneously orchestrating promotional campaigns and other efforts to artificially inflate the price and trading volume of those shares.  DOJ announced parallel civil and criminal proceedings.  SEC; DOJ

October 1, 2018

The Bank of of Nova Scotia has agreed to pay an $800,000 penalty after self-reporting that certain of its traders engaged in unlawful spoofing by placing orders to buy or sell precious metals futures contracts with the intent to cancel the orders before execution. The spoofed orders were meant to create the impression of market interest in order to induce other market participants to respond to genuine orders placed by the traders.  CFTC

September 26, 2018

Two brokerage firms, UK-based TFS-ICAP LIMITED and New York-based TFS-ICAP LLC, pled guilty to securities fraud under New York's Martin Act for their roles in posting fake trades, bids, and offers by inter-dealer brokers for emerging market foreign exchange currency options.  The fake trades were intended to create a false appearance of liquidity in the emerging markets FX options market and encourage traders to buy and sell FX options via TFS-ICAP rather than other brokers.  In addition to the criminal pleas by the companies, a civil settlement requires them to implement remedial procedures, retain an independent monitor, pay $1.5 million, and cooperate in ongoing investigations.  NY AG.

September 19, 2018

Bank of America, N.A., has been ordered by the CFTC to pay a $30 million penalty for its attempted manipulation of the USD ISDAFIX benchmark between 2007 and 2012.  During the relevant time period, the U.S. Dollar International Swaps and Derivatives Association Fix, a leading global benchmark referenced in a range of interest rate products, was set each day.  BofA attempted to manipulate USD ISDAFIX through false, fraudulent, and misleading actions in critical time periods designed to influence the final published USD ISDAFIX.  The CFTC enforcement action against BofA is one of a series involving manipulative conduct in connection with the USD ISDAFIX benchmark.  CFTC

September 18, 2018

ICAP Capital Markets LLC has been ordered by the CFTC to pay a $50 million penalty for its role in aiding and abetting attempts by several of its bank clients to manipulate the USD ISDAFIX benchmark between 2007 and 2012.  During the relevant time period, the U.S. Dollar International Swaps and Derivatives Association Fix, a leading global benchmark referenced in a range of interest rate products, was set each day in a process initiated by ICAP, which captured and recorded swap rates and spreads based on trading activity at specific times on ICAP’s trading platform for swap spreads and on an affiliate’s platform for U.S. Treasury securities.  ICAP knew that its bank customers often attempted to manipulate USD ISDAFIX by bidding, offering, and executing transactions at critical time periods, and assisted them in their manipulative attempts.  The CFTC enforcement action against ICAP is one of a series involving manipulative conduct in connection with the USD ISDAFIX benchmark. CFTC

July 30, 2018

The CFTC ordered Chicago-based R.J. O’Brien & Associates (“RJO”) to pay a $600,000 civil penalty in connection with the company’s failure to detect its client’s post-execution trade allocation scheme. As a registrant, RJO had a duty to monitor the relevant transactions for suspicious activity, but failed to adequately do so, according to the Commission. As a result, the scheme went undetected, and the client was able to allocate profitable trades to specific accounts, sending less profitable trades to the customer or Pool accounts. CFTC