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Market Manipulation and Trading Violations

This archive displays posts tagged as relevant to market manipulation and trading violations, including front running, spoofing, straw purchases, naked short selling, and pump-and-dump schemes. You may also be interested in the following pages:

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CFTC Sets Sights on Binary Options Fraud

Posted  09/17/20
By Sarah “Poppy” Alexander
commodity futures trading commission logo
The CFTC continues its hot streak, aggressively pursuing fraudsters and rewarding whistleblowers who come forward with valuable information.  One particular enforcement trend stands out: a number of high-profile settlements related to illegal binary options trading platforms. Binary options are the OTB of the stock market—a method of gambling whether particular stocks will go up or down without actually...

Catch of the Week: Bank of Nova Scotia Fined for Commodities Fraud and False Statements to Investigators

Posted  08/21/20
building of a bank
Self-disclosure offers wrong-doing corporations a path to leniency: Fess up, the government says, and we’ll go easier on you.  But as the Bank of Nova Scotia learned, you had better reveal the full extent of the problem, or you are just making your problem worse. The Bank had made a self-disclosure that secured it's leniency and an $800,000 deal for charges of commodities fraud.  When the CFTC later determined...

July 20, 2020

UBS Financial Services Inc. and two of its registered representatives will pay $10 million in penalties, disgorgement, and interest to resolve claims that UBS improperly redirected municipal bond offerings away from retail customers and to “flippers,” who re-sold the bonds to other broker-dealers, including UBS.  This practice allowed UBS to circumvent the priority retail order periods set by bond issuers and improperly obtain a greater allocation of bonds for its own inventory.  SEC

June 18, 2020

Deutsche Bank AG has agreed to pay over $10 million to settle two enforcement matters with the CFTC.  The first matter, settled for $1.25 million, involved numerous instances of spoofing by two Tokyo-based traders of Deutsche Bank Securities Inc. in 2013.  The second matter involved a swap reporting platform outage in 2016 that prevented Deutsche Bank from reporting swap data for five full days, exacerbated existing reporting problems, and ultimately caused new reporting problems, including some that violated a 2015 CFTC order.  To settle that matter, Deutsche Bank will pay $9 million, as well as undergo compliance monitoring.  CFTC

DOJ Charges Healthcare CEO with Criminal Securities and Healthcare Fraud

Posted  06/12/20
Hands in handcuffs behind back of white man in business suit
In 2008, Rahm Emanuel, then-President Obama’s chief of staff, famously said, “You never want a serious crisis to go to waste.  I mean, it’s an opportunity to do things that you think you could not do before.”  However poorly phrased, generations of political and business leaders have understood the kernel of truth in his admonition. So have scammers and rip-off artists. We have been following the...

Top Ten SEC and CFTC Recoveries of 2019

Posted  01/24/20
Silver Whistle Hanging
2019 was another busy year for the SEC and CFTC.  Once again, the SEC netted hundreds of millions of dollars in penalties and fines from companies and individuals accused of defrauding investors, breaching fiduciary duties, and violating the securities laws.  And that’s in addition to the SEC’s robust FCPA enforcement in 2019.  Meanwhile, the CFTC continued to root out market manipulators and other fraudsters...

November 7, 2019

Tower Research Capital, LLC, a proprietary trading firm, has been ordered to pay a record $67.4 million for engaging in a manipulative and deceptive spoofing scheme from 2012 to 2013.  The Commission found that when Tower traders had genuine orders on one side of the market, they would also place orders on the other side that they intended to cancel before execution, intending to create a false impression of supply and demand to induce other market participants to trade against their genuine orders. The judgment for over $32.6 million in restitution, $10.5 million in disgorgement, and $24.4 million in civil monetary penalty is reportedly the largest ever ordered in a spoofing case. Tower also entered into a deferred prosecution agreement in a settlement with DOJ, crediting their monetary settlement with the CFTC and imposing compliance obligations. CFTC; DOJ

October 2, 2019

Brokerage firms BGC Financial LP and GFI Securities LLC will pay $15 million and $10 million, respectively, to the CFTC, and $7.5 million and $5 million, respectively, in penalties under New York's Martin Act based on the admitted practices of their brokers in posting sham bids and offers on foreign exchange options in emerging markets currencies referred to as EFX options.  This so-called "flying" of prices was done to create a false appearance of greater liquidity in the EFX options market. In addition, the brokers engaged in the "printing" of fake trades on EFX options, falsely representing that trades had occurred at particular levels and prices in an effort to induce follow-on trades at the same levels.  In addition to the monetary penalties, the brokerage firms have agreed to additional compliance, monitoring, and oversight.  CFTCNY

October 2, 2019

Brokerage firm Lek Securities Corp. and its CEO Sam Lek will pay almost $2 million to resolve allegations that they facilitated the manipulative trading scheme of Ukraine-based customer Avalon FA, Ltd.  Lek provided Avalon with the means to engage in "layering" and other cross-market manipulation.  Layering involves placing and canceling orders to signal inaccurate prices.  Avalon also engaged in other practices to buy and sell stocks to artificially impact options prices.  Lek Securities will pay a $1 million penalty plus $526,000 in disgorgement and interest; Sam Lek will pay a $420,000 penalty.  Defendants have admitted the facts alleged and Lek Securities has agreed to retain an independent compliance monitor.  SEC

October 1, 2019

Three firms will pay a total of $3 million to resolve claims that each violated the Commodity Exchange Act's prohibition on spoofing.  Morgan Stanley Capital Group Inc. will pay $1.5 million for engaging in spoofing the precious metals futures markets; Belvedere Trading LLC will pay $1.1 million for engaging in spoofing in the Chicago Mercantile Exchange E-mini S&P 500 futures market; and, Mitsubishi International Corporation will pay $400,000 for acts of spoofing silver and gold futures on the Commodity Exchange, Inc. markets.  CFTC
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