In the US, federal prosecutors have filed a complaint against ex-UBS (UBS) trader Andre Flotron, charging him with commodities fraud, wire fraud, conspiracy, and spoofing. The latter is what they claim that he engaged in to rig the precious metal futures market. Spoofing involves issuing bids or offers that are deceptive to manipulate a market.
According to the criminal complaint, Flotron and co-conspirators engaged in the alleged spoofing scam from at least 7/2008 through at least 11/2013. He would submit a small sell order or buy order for a certain futures contract, which would be close in price to the current market price. Flotron would then put in an order at least 10 times bigger on the market’s opposite side before cancelling the bigger order seconds after at least part of the order he made originally was put through.
Flotron also is accused of teaching a young trader how to spoof. The trader, who spoofed on numerous occasions, struck a nonprosecution deal in which he agreed to share information about the alleged spoofing.
UBS Under Fire in Class Action Gold Rigging Securities Case
At the moment, UBS is contending with a proposed class action securities case brought by gold sellers claiming that from 2004 to 2013, several banks colluded together to lower gold prices to their benefit. The plaintiffs in the case include Barclays Bank PLC (BARC), Societe Generale, HSBC Bank PLC (HSBC), Bank of Nova Scotia (BNS), and Deutsche Bank (DB), which has settled. Although UBS was dismissed as a defendant because it wasn’t directly involved in gold price rigging, the plaintiffs in June submitted chat transcripts they claim indicate that UBS traders also coordinated trades to manipulate prices. The plaintiffs in the case include investors and traders.
This month, UBS submitted a brief arguing that plaintiffs had mispresented the transcripts, cherry picking which ones to present and removing the time stamps. UBS maintains that the messages took place during normal business hours in Singapore and not close enough to the daily gold fix time for the conversations to be relevantly related. The bank maintains that the chats submitted do not demonstrate that Deutsche Bank let UBS know ahead of time what the “gold fixing outcome” would be on any day. At most, said UBS, the chats show “unilateral trading strategies” and perhaps indicate that “episodic coordination” took place.
Deutsche Bank Settled Gold and Silver Rigging Claims
Deutsche Bank, which settled the gold price fix allegations against it, paid $60M last year. The agreement came just months after the bank settled allegations that it colluded with other banks to rig silver prices and agreed to pay $30M. Plaintiffs contend that the banks suppressed prices on about $30B of silver and silver financial instruments that were traded annually beginning in 1999. Investors accused Deutsche Bank, Bank of Nova Scotia, and HSBC Holdings of manipulating silver prices during daily secret meetings. As a result, they claim, the banks were able to make massive returns.
They also had accused of UBS of taking advantage of the price fixing. The Swiss bank was once a defendant in the silver rigging lawsuit but has since been dismissed from it.
Contact the SSEK Partners Group if you would like us to help you determine whether you may have grounds for a securities case. Your initial consultation is a free, no obligation session with one of our experienced securities fraud attorneys.
Ex-UBS trader accused of manipulating metals market in 5-year ‘spoofing’ scheme, CNBC, September 14, 2017