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Page 7 of 14

July 26, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Simon Posen of New York, New York for engaging in thousands of incidents of “spoofing” — bidding or offering with the intent to cancel the bid or offer before execution — in gold, silver, and copper futures contracts traded on the Commodity Exchange, Inc., and crude oil futures contracts traded on the New York Mercantile Exchange over a period spanning more than three years. Posen traded from home for his own account and was not employed by any corporate entity, according to the Order. The CFTC Order requires Posen to pay a $635,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing. The Order further permanently bans Posen from trading in any market regulated by the CFTC and from applying for registration or claiming exemption from registration with the CFTC in any capacity. CFTC

June 29, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges against Rosenthal Collins Capital Markets, LLC, now known as DV Trading LLC(RCCM), of Chicago, Illinois, for engaging in illegal wash sales in order to generate rebates of exchange fees based upon increased trading volumes. The CFTC Order requires RCCM to pay a $5 million civil monetary penalty and cease and desist from violating Section 4c(a) of the Commodity Exchange Act (CEA) and Commission Regulation 1.38(a), as charged.  A separate CFTC Order finds that former RCCM trader, Brandon Elsasser (Elsasser), entered illegal wash sales and requires him to pay a $200,000 civil monetary penalty, and orders him to cease and desist from violating CEA Section 4c(a) and Commission Regulation 1.38(a), as charged. CFTC

June 29, 2017

The U.S. Commodity Futures Trading Commission (CFTC) announced today that it entered into non-prosecution agreements with Jeremy Lao (Lao) of New York, New York, Daniel Liao (Liao) of Minato-Ku, Japan, and Shlomo Salant (Salant) of New York, New York. In their non-prosecution agreements, Lao, Liao, and Salant each admits that he engaged in the unlawful disruptive trade practice of “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution) in U.S. Treasury futures markets while trading for Citigroup Global Markets Inc. (Citigroup) in 2011 and 2012. The non-prosecution agreements emphasize Lao’s, Liao’s, and Salant’s timely and substantial cooperation, immediate willingness to accept responsibility for their misconduct, material assistance provided to the CFTC’s investigation of Citigroup, and the absence of a history of prior misconduct. CFTC

June 21, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today entered an Order filing and simultaneously settling charges against Respondents McVean Trading & Investments, LLC (MTI), a Memphis-based Futures Commission Merchant (FCM), its Chairman and CEO, Charles Dow McVean, Sr. (McVean), and President, Michael J. Wharton (Wharton), and long-time MTI consultant Samuel C. Gilmore (Gilmore).  The Order finds that, by secretly using cattle feedyards as straw purchasers for hundreds of long live cattle futures contracts — which at some points more than doubled CME spot month position limits — McVean and Wharton intentionally or recklessly used a manipulative or deceptive device to inject false information into the market, which had the potential to affect the live cattle futures market.  By using these straw purchasers, McVean and Wharton were able to control substantial portions of the market without disclosing that control, which caused other market participants, including live cattle traders with open short positions, to see wider market interest, participation, and fragmentation on the long side of the market than actually existed.  James McDonald, the CFTC’s Director of Enforcement, said: “For markets to have integrity, market participants must be able to trust that the markets operate free of manipulative or deceptive conduct.  The Commission will always act to address those threats to the markets it regulates.  That includes cases like this one, where market participants try to game the markets by injecting false information, which distorts the view of that market seen by other participants.” The Order requires McVean to pay a civil monetary penalty of $2,000,000, MTI to pay a civil monetary penalty of $1,500,000, Wharton to pay a civil monetary penalty of $1,000,000, and Gilmore, who was charged as an aider and abettor of McVean’s position limits violations, to pay a civil monetary penalty of $500,000. CFTC

June 2, 2017

The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against David Liew for engaging in numerous acts of spoofing, attempted manipulation, and, at times, manipulation of the gold and silver futures markets. Liew engaged in this unlawful conduct for more than two years while he was employed as a junior trader on the precious metals desk for a large financial institution (Financial Institution 1). The CFTC Order finds that Liew acted individually and in coordination with traders at Financial Institution 1 and with a trader at another large financial institution. In the Order, Liew admits the facts of his manipulation and spoofing activity and acknowledges that his conduct violated the Commodity Exchange Act (CEA) and Commission Regulations. The Order permanently bans Liew from trading commodity interests and requires him to comply with undertakings never to engage in other commodity-interest related activities, including seeking registration, acting in a capacity requiring registration, or acting as a principal, agent, officer or employee of any person registered, required to be registered or exempt from registration. CFTC

May 19, 2017

The Securities and Exchange Commission today filed fraud charges against Robert W. Murray a Virginia-based mechanical engineer accused of scheming to manipulate the price of Fitbit stock by making a phony regulatory filing. According to the SEC’s complaint, Murray purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a company named ABM Capital LTD sought to acquire Fitbit’s outstanding shares at a substantial premium.  Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100. The SEC alleges that Murray created an email account under the name of someone he found on the internet, and the email account was used to gain access to the EDGAR system.  Murray then allegedly listed that person as the CFO of ABM Capital and used a business address associated with that person in the fake filing.  The SEC also alleges that Murray attempted to conceal his identity and actual location at the time of the filing after conducting research into prior SEC cases that highlighted the IP addresses the false filers used to submit forms on EDGAR.  According to the SEC’s complaint, it appeared as though the system was being accessed from a different state by using an IP address registered to a company located in Napa, California. SEC

April 24, 2017

The Securities and Exchange Commission today announced fraud charges against Kevin J. Amell, a Massachusetts-based portfolio manager accused of diverting at least $1.95 million to his personal brokerage account from a fund over which he had trading authority. The SEC’s complaint alleges that Amell carried out a fraudulent matched-trades scheme in which he prearranged the purchase or sale of call options between his own account and the brokerage accounts of the fund at prices that were disadvantageous to the fund and advantageous to him.  In one series of trades involving Amazon securities, for example, Amell allegedly generated a $23,000 profit for himself in less than 23 minutes at the fund’s expense. “As alleged in our complaint, Amell abused his trading authority at least 265 times by matching trades between the fund and his personal account at prices that he intentionally and fraudulently skewed to benefit himself,” said Joseph G. Sansone, Co-Chief of the SEC Enforcement Division’s Market Abuse Unit. In a parallel action, the U.S. Attorney’s Office for the District of Massachusetts today filed criminal charges against Amell. SEC

March 10, 2017

The SEC announced fraud charges against Ukraine-based trading firm Avalon FA Ltd. for manipulating the U.S. markets hundreds of thousands of times, and against New York-based brokerage firm Lek Securities and its owner Samuel Lek for allegedly assisting in the fraud.  The SEC’s complaint alleges that Avalon touted itself to traders as a destination to engage in layering, a scheme in which orders are placed but later canceled after tricking others into buying or selling stocks at artificial prices, resulting in illicit profits.  Avalon allegedly made more than $21 million in the layering scheme involving U.S. stocks during a five-year period.  According to the SEC’s complaint, Avalon also made more than $7 million in illicit profits through a cross-market manipulation scheme in which the firm bought and sold U.S. stocks at a loss in order to manipulate the prices of the stock and its corresponding options so that it could then profitably trade at artificial prices.  The SEC further alleges that Lek Securities and Samuel Lek made the schemes possible by providing Avalon with access to the U.S. markets, approving the cross-market trading scheme, and improving its trading technology to assist Avalon’s trading.  According to the SEC’s complaint, Lek also relaxed its layering controls after Avalon complained.  The SEC’s complaint also describes fraud charges against Avalon’s named owner Nathan Fayyer and Sergey Pustelnik who allegedly kept his controlling interest in Avalon undisclosed and embedded himself at Lek Securities as a registered representative, using his position to facilitate the scheme. SEC

March 30, 2017

Stephen Gola and Jonathan Brims were ordered to pay $350,000 and $200,000 respectively for spoofing in U.S. Treasury Futures Markets. The CFTC Order found that between July 2011 and December 2012, Gola and Brims engaged in spoofing more than 1,000 times in various Chicago Mercantile Exchange U.S. Treasury futures markets. The spoofing was done by placing orders in a futures market after a smaller bid was placed on the opposite side of the same or correlated futures or cash market. CFTC

January 19, 2017

Citigroup Global Markets Inc. was ordered to pay a $25 million civil monetary penalty for spoofing. Spoofing is bidding or offering with the intent to cancel the bid or offer before execution. The unlawful conduct occurred between July 2011 and December 2012. Citigroup Global Markets conducted the spoofing in U.S. Treasury futures markets. CFTC
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