Daily Management Review

UBS, Deutsche Bank, HSBC to be fined by U.S. CFTC for spoofing and manipulation: Reuters


UBS, Deutsche Bank, HSBC to be fined by U.S. CFTC for spoofing and manipulation: Reuters
According to the news agency Reuters, European lenders UBS, HSBC and Deutsche Bank are set to be fined by the U.S. derivatives regulator for millions of dollars each for the so-called “spoofing” and manipulation in the future market in the U.S.
Sources reportedly told Reuters that the Department of Justice (DoJ) and the Federal Bureau of Investigation (FBI) were involved in the multi-agency investigations along with the Commodity Futures Trading Commission (CFTC) – which is the firsts of its kind, which resulted in the enforcement action.
While there were no exact figures available from the sources, it is expected that the fines would be over ten million for the fines for UBS and Deutsche Bank while the fines would be lower for HSBC.  
There were no comments from spokes persons of spokesmen for HSBC, Deutsche Bank and UBS.
The act of spoofing essentially entails a trader placing bids for purchasing or offering to sell futures contracts when the actual and ultimate intent was to cancel the futures before they could be executed. Spoofers are able to impact the prices of futures to gain from their market positions as the act creates the illusion of demand for a commodity.
According to the provisions of the 2010 Dodd-Frank financial reform, the act of spoofing is a criminal offense.
According to sources with knowledge of the matter, while UBS self-reported the manipulative behavior, in other cases, the wrong doing was revealed to the authorities after a there was a settlement earlier of investigations into forex market manipulation.
Sources also said that it had been over a year that the investigations on the banks was being carried out.
CFTC’s head of enforcement James McDonald is being credited with this settlement that is amongst the most high-profile ones by him. McDonald was appointed to the position in March 2017.
McDonald had said in September that he would encourage firms and companies and employees to report their own misdoings and hence cooperate with investigators. This is a strategy that McDonald, who was previously a prosecutor with the Southern District of New York, hopes would make prosecution of individuals a lot easier for the authorities
The first person who was accused and punished and criminally prosecuted on charges of manipulative trading practice was former New Jersey-based high-speed trader Michael Coscia whose conviction was upheld by a U.S. appeals court in August.
There were no comments from a spokeswoman for the CBOE. A spokeswoman for the CME Group, the other major futures bourse, also did not respond for a comment request.

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