CFTC Cases: Ex-Citigroup Global Markets Traders Settle Spoofing Charges and Vision Financial Partners to Pay Over $6.5M in Off-Exchange Binary Options Fraud Case

Former Citigroup Global Markets Traders to Pay Penalties for Spoofing
Ex-Citigroup Global Markets Inc. (C) traders Jonathan Brims and Stephen Gola have settled spoofing charges that the US Commodity Futures Trading Commission brought against them. According to the regulator, the two men engaged in spoofing while trading for the firm, and they must now pay $200K and $350K in civil monetary penalties, respectively. They also are temporarily “banned from trading in futures markets.” Goal and Brims won’t be allowed to resume trading in the futures markets until six months after they’ve paid their penalties in full.

According to their respective orders, the two men engaged in spoofing, which involves making a bid or offer with the intention to cancel the bid or offer prior to execution of the bid. They did this over 1,000 times in different Chicago Mercantile Exchange US Treasury futures products. They would make offers or bids of at least 1,000 lots even though they planned to cancel the orders before they actually occurred.

The orders were made after another small offer or bid was made on the other side of the same market “or a correlated futures or cash market.” The CFTC said that the two men initiated the orders in order set up or increase an already existing imbalance in the order book. They purportedly canceled the orders after the smaller orders were filed or if they determined that there was too high a risk that their orders might actually go through.

Brims and Gola are accused of working with at least one more Citigroup Trader on their spoofing scam.

It was in January that Citigroup Global Markets Inc. reached a $25M settlement with the CFTC related to the spoofing violations allegations.

US District Court Submits Consent Order in Binary Options Fraud Case
In the U.S. District Court for the Southern District of Florida, a judge ruled that Neal Pecker and his Vision Financial Partners LLC must pay over $6.5M in restitution to investors. Pecker and his firm are accused of fraudulent solicitation and misappropriation related to off-exchange binary options.

According to the Order, Pecker and his firm fraudulently solicited about $3M from over 120 investors in Canada and the US to get them to trade in off-exchange binary options. Pecker and Vision Financial Partners are accused of making false and misleading misrepresentations to potential clients about their trading experience, as well as regarding the latter’s chances of profiting from the investments. They also didn’t disclose that trading would take place via unregistered off-shore or foreign firms or that investors would not be able to take out funds from their trading accounts until they had traded at least 20 times the trading account’s value.

Pecker and his firm are accused of misappropriating nearly $2M of client monies, which they allegedly diverted to relief defendants.

In addition to jointly and severally paying more than $2.7M in restitution and a $3.75M civil penalty, the Consent Order permanently bans Pecker and Vision Financial from trading and being registered. Meantime, relief defendants DDGCM Trust and Prometheus Enterprises Inc. must disgorge more than $1M of the ill-gotten funds.

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The CFTC Order in the Gola Case (PDF)

The CFTC Order in the Brims Case (PDF)

The Consent Order in the CFTC Case Against Pecker and Vision Financial (PDF)