US Federal Court Orders Trader to Pay Manipulative Scheme Penalties

A civil monetary penalty of $150,000 is imposed on each defendant.

The US Commodity Futures Trading Commission ( CFTC ) announced on Thursday that a judge of the US District Court for the Northern District of Illinois imposed trading bans on commodity traders and ordered them to pay penalties for engaging in a manipulative scheme.

According to the press release, Judge Steven C. Seeger issued final judgments and consent orders against James Vorley and Cedric Chanu, former precious metals traders, for spoofing and engaging in a deceptive or manipulative scheme.

Each defendant faces a civil monetary penalty of $150,000 and a five-year ban from trading with any registered entity or registering with the CFTC in any capacity, as well as an order to cease and desist from violating the CEA, as alleged, where the CME Group collaborated in the investigation.

What Happened？

The orders reveal that, as of July 2011, Vorley and Chanu employed at Bank A, placed orders for gold, silver, platinum, or palladium futures contracts they wanted to be filled (genuine orders) and simultaneously entered orders on the other side of the market for the same contract that they intended to cancel before execution (spoof orders).

By placing the spoof orders, Vorley and Chanu intentionally or recklessly sent market participants signals of greater supply or demand to create the impression that the price would move up or down and trick market participants into executing orders that they placed on the opposite side of the market.

“This enforcement action demonstrates the CFTCs commitment to aggressively pursuing individuals who spoof in our markets. As this case shows, we will continue to work vigorously to hold individuals accountable, and not just the companies that employ them, for misconduct in our markets,” Vincent McGonagle, CFTC Acting Director of Enforcement, pointed out.

Recently, the CFTC filed a civil enforcement action to charge four operators for running a $44 million Bitcoin Ponzi scheme. Dwayne Golden of Florida, Jatin Patel of India, Marquis Egerton of North Carolina and Gregory Aggesen of New York were charged with fraud for operating Ponzi schemes involvingBitcoin, for fraudulently soliciting more than $44 million of investments, and for misappropriating millions of dollars.