Federal District Court Sanctions Individual for "Spoofing" in Gold and Silver Markets

The U.S. District Court for the District of Nevada entered a Consent Order, resolving CFTC charges that a metals trader engaged in spoofing in the gold and silver futures markets.

In its Complaint, the CFTC alleged that on "hundreds of occasions" the individual engaged in manipulative or deceptive acts and practices in violation of the Commodities Exchange Act and CFTC regulations. In the Consent Order, the Court stated that the individual entered orders for gold or silver futures that he intended to cancel before execution. The Court found the individual placed orders on opposite sides of the gold or silver futures market to intentionally or recklessly send false signals to market participants of increased supply or demand. The Court stated that the spoof orders allowed the individual to fill orders on the opposite side of the market sooner, at a better price, and/or in larger quantities than he otherwise would.

The Court (i) imposed a $750,000 civil monetary penalty, (ii) permanently prohibited the individual from trading in commodity interests and registering with the CFTC in any capacity and (iii) imposed a permanent injunction prohibiting the individual from further violations of the CEA.