CFTC Cases: Non-Prosecutorial Deals Reached With Ex-Citigroup Traders Over Spoofing Allegations, NY-Based Firm is Barred From Commodity Interest Trading, and Regulator Alleges Fraud Involving Forex Trading of a Pooled Investment

Former Citigroup Global Markets Traders Accused of Spoofing Arrive at Non-Prosecution Deals
The US Commodity Futures Trading Commission has reached non-prosecution agreements with three ex-Citigroup Global Markets Inc.(C) traders. Daniel Liao, Jeremy Lao, and Shlomo Salant admitted to engaging in spoofing in US treasury futures markets while working for the firm. The three of them also provided information about misconduct that was committed by others.

According to the non-prosecution deals, each trader submitted big orders on the opposite of orders that were smaller with the intention of cancelling the bigger orders. They engaged in spoofing to fill their smaller orders at prices they preferred.

The agreements with the ex-Citigroup traders comes nearly six months after the bank settled with the CFTC allegations over spoofing and supervisory-related deficiencies. A number of unlawful incidents at Citigroup were identified in the non-prosecutorial deals.

In January, the firm agreed to pay a $25M penalty. In March, the CFTC settled with ex-Citigroup traders Jonathan Brims and Stephen Gola over spoofing allegations, too.

Wall Street Pirate Management is Permanently Barred from Commodity Interest Trading
A district court judge in New York has permanently barred Wall Street Private Management and Gary Creagh from registering with the CFTC and taking part in commodity interest trading. Stemming from a complaint filed by the regulator in 2015, the firm and Creagh were accused of making false statements to the National Futures Association in required reports during an audit, which violated the Commodity and Exchange Act.

Creagh is also accused of making multiple false statements and keeping material information from the NFA, including falsely representing that the commodity pool he ran for Wall Street Pirate was inactive even though he had accepted money from pool participants for commodity futures that were actively traded.

CFTC Accuses Global FX Club of Fraud Related to a Pooled Investment in Forex Trading

In a civil enforcement action, the CFTC has charged Michael S. Wright and his Wright Time Capital Group (doing business as Global FX Club) with misappropriation related to a pooled investment in foreign currency derivatives trading. According to the forex trading fraud case, Wright and his firm were involved in a scam to solicit over $400K from at least 10 parties and they promised to use the money to engage in forex trading. Instead, they allegedly traded a portion of the money and misappropriated most of the funds for personal and business expenses that the investors had never authorized.

The CFTC is accusing Global FX Club and Wright of hiding trading losses and issuing false account statements that would make it seem as if the trading was making positive gains even when no Forex trading was taking place. When there was forex trading, the trades did not money. The regulator wants restitution for the pool participants who were harmed, as well as disgorgement, civil monetary penalties, as well as registration and trading bans.

At The SSEK Partners Group, we are committed to helping investors recoup their securities fraud losses caused by negligence or wrongdoing. Please contact our securities attorneys today to schedule your free, no obligation consultation.
CFTC Enters into Non-Prosecution Agreements with Former Citigroup Global Markets Inc. Traders Jeremy Lao, Daniel Liao, and Shlomo Salant, CFTC, June 29, 2017

Opinion in the Wall Street Pirate Management Case (PDF)

Complaint in the Global FX Club Case (PDF)