ARTICLE
25 September 2018

Futures Trader And Firm Settles CFTC "Spoofing" Charges

CW
Cadwalader, Wickersham & Taft LLP

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A futures trader and trading firm agreed to pay $2.3 million to settle CFTC charges related to a "spoofing" scheme to create the appearance of an order book imbalance.
United States Finance and Banking

A futures trader and trading firm agreed to pay $2.3 million to settle CFTC charges related to a "spoofing" scheme to create the appearance of an order book imbalance.

According to the Orders (see here and here), Victory Asset, Inc. ("Victory") and Michael D. Franko took part in a spoofing scheme (i.e. "bidding or offering with the intent to cancel the bid or offer before execution") regarding copper and gold futures contracts offered on the Commodity Exchange and light sweet crude oil futures offered on the New York Mercantile Exchange. The scheme also involved "cross-market spoofing" - i.e., spoofing in one market to benefit a position in another market.

Victory and Mr. Franko neither admitted to nor denied the charges. Victory agreed to pay $1.8 million in penalties and Mr. Franko agreed to pay $500,000.

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