Deutsche Bank, UBS, and HSBC Securities Settle Respective Spoofing Cases with the CFTC for $46.6M

Deutsche Bank Securities Inc. and Deutsche Bank AG (DB) will pay a $30M civil penalty to resolve charges brought by the Commodity Futures Trading Commission accusing them of spoofing. According to the regulator, from at least 2/2008 through 9/2014, DB AG, with the help of a number of precious metal traders, sought to rig the price of precious metals futures contracts that were traded on the Commodity Exchange, Inc.

The CFTC’s order said that the traders worked alone and with each other to buy or sell these contracts while planning all along to cancel them before they were executed after a smaller offer was made on the opposite side of the market. The spoof orders were purportedly made to give the impression of market depth in order to generate trading interest.

The regulator found that through the traders’ actions, Deutsche Bank AG sought to not only rig the price of precious metals futures contracts but also to profit from these manipulations. The CFTC said the firm worked with one trader in Singapore who made orders and trades to “trigger customer stop-loss orders.”

As for Deutsche Bank Securities Inc., the regulator said that it did not engage in proper supervision, failed to identifying possible misconduct, and did not follow up on “potential instances of misconduct.”

UBS to Pay CFTC $15M
Deutsche Bank is not the only firm that the CFTC has recently accused of spoofing. The regulator is ordering UBS AG (UBS) to pay a $15M penalty after finding that from 1/2008 through at least 12/2013, UBS also had precious metals traders trying to rig the price of precious metals futures contracts. Similar tactics as those attributed to the traders in the Deutsche Bank case are alleged.

HSBC Accused of Spoofing With the Help of NY Trader
In the CFTC’s case against HSBC Securities Inc. (HSBC), for which the firm will pay a $1.6M penalty, a trader from HSBC’s office in New York was purportedly involved. According to the regulator’s order, from at least 6/2011 through 8/2014, HSBC and its trader took part in spoofing related to futures products in precious metals that traded on the Commodity Exchange—gold, in particular. The trader would make orders for precious metals futures contracts, all the while intending to cancel the orders prior to execution and once a smaller bid had been placed.

Spoofing violates the Commodity Exchange Act.

CFTC Files Spoofing Charges Against Numerous Individuals
The same day that the CFTC announced the charges and settlements reached with Deutsche Bank, HSBC Securities, and UBS AG, the regulator announced that spoofing cases had been brought related to the precious metals futures market against a number of individuals, including Swiss resident Andre Flotron, UK resident James Vorley, and United Arab Emirates resident Cedric Chanu. Another person accused of spoofing is Australian citizen Jiongsheng Zhao, who faces allegations that he engaged in manipulative and deceptive practices involving the “E-mini S&P 500 futures contract market on the Chicago Mercantile Exchange” that included 3,100 spoofing instances.

Jitesh Thakkar of Illinois and his Edge Financial Technologies, Inc. are accused of aiding and abetting spoofing and engaging in a scam also involving the same market on the same exchange as Zhao. The CFTC’s complaint said that a trader asked Thakkar and his company to develop a trading software application that would facilitate spoofing while sending fake information about “supply and demand for the e-mini S & P” into the market. The trader allegedly engaged in spoofing on thousands of occasions.

If you are an investor that has sustained losses that you believe may have been caused by spoofing or some other type of financial fraud or misconduct, contact The SSEK Partners Group today.

The CFTC’s Order in the Deutsche Bank Case (PDF)

The CFTC’s Order in the UBS Case (PDF)

The CFTC’s Order in the HSBC Securities Case (PDF)


More Blog Posts:

HSBC Arrives at $100M Currency Rigging Settlement with DOJ, Institutional Investor Securities Blog, January 22, 2018

Barclays Capital Trader is Indicted in Massive Front Running Scam, Institutional Investor Securities Blog, January 17, 2018

Multimillion Dollar Investment Adviser Fraud Cases Target Widows, Older Investors, and Other Retail Investors, Stockbroker Fraud Blog, December 28, 2017