U. S. derivatives regulator will soon announce it has fined European lenders UBS, HSBC and Deutsche Bank millions of dollars each for so-called “spoofing” or tricking and manipulating the U.S. futures market.
Official sources told the Media on Saturday that enforcement action by the Commodity Futures Trading Commission (CFTC) was the result of a multi-agency investigation that also involved the Department of Justice (DoJ) and the Federal Bureau of Investigation (FBI) – the first of its kind for the CFTC.
The fines for UBS and Deutsche Bank will be upward of 10 million dollars, while the fine for HSBC will be slightly less than that, sources said, without providing exact figures.
Spokesmen for HSBC, Deutsche Bank and UBS declined to comment.
Spoofing involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution.
By creating an illusion of demand, spoofers can influence prices to benefit their market positions.
Spoofing is a criminal offence under a provision implemented as part of the 2010 Dodd-Frank financial reform.
Some of the manipulative behaviour came to light as a result of the authorities’ previously-settled probes into FOREX market manipulation while UBS self-reported the wrong doing, according to official sources.
The bank investigations have been ongoing for more than a year, one of the sources said.
The settlement is the most high-profile brought so far by the CFTC’s head of enforcement James McDonald who was appointed to the role in March 2017.
McDonald, who was previously a prosecutor in the Southern District of New York, said in September he planned to encourage companies and staff to report their own wrongdoing and cooperate with investigators, a strategy he hoped would make it easier to prosecute more individuals.
In August, a U.S. appeals court upheld the conviction of former New Jersey-based high-speed trader Michael Coscia who was the first individual to be criminally prosecuted for the manipulative trading practice.
A spokeswoman for the CBOE, one of the U.S.’s major futures exchanges, declined to comment. (Reuters/NAN)
