Trading Firm and CEO Charged with Spoofing Trades on Energy Futures

The CFTC filed charges against a trading firm and its CEO for engaging in "manipulative and deceptive" trading practices in the natural gas futures and crude oil futures markets.

In a Complaint filed with the District Court for the Northern District of Illinois Eastern Division, the CFTC alleged that the firm wrongfully obtained financial gains from a spoofing scheme by "intentionally or recklessly" sending false signals of increased buying or selling interest to cause counterparties to enter higher bids or lower offers. The CFTC said that the firm was then able to execute orders on the opposite side of their order book at "advantageous prices."

The CFTC asserted that the firm violated (i) CEA Sections 4c(a)(5)(C) ("Prohibited transactions") and 6(c)(1) ("Prohibition regarding manipulation and false information") and CFTC Rule 180.1(a)(1) and (3) ("Prohibition on the employment, or attempted employment, of manipulative and deceptive devices") and (ii) CFTC Rule 166.3 ("Supervision") for related supervisory failures.

The CFTC asked that the Court enter an order imposing civil monetary penalties, restitution, disgorgement of ill-gotten gains, registration and trading bank and a permanent injunction.