Chicago, IL – The Commodity Futures Trading Commission (CFTC) today announced charges and settlements against four individuals and a trading firm for engaging in spoofing – a manipulative trading practice – across multiple major exchanges. The settlements involve Brendan Delovitch and Wesley Johnson, both of Canada, Rajeev Kansal of India, and ARB Trading Group LP, a Chicago-based proprietary trading firm.
The CFTC alleges that the respondents engaged in spoofing activity in lean hogs, live cattle, silver, copper, soybean, cotton, canola, and sugar futures contracts traded on the Chicago Mercantile Exchange (CME), Commodity Exchange (COMEX), Chicago Board of Trade (CBOT), and ICE Futures US (ICE) between May 2017 and June 2020. Spoofing involves placing orders with the intent to cancel them before execution, creating a false impression of market demand or supply.
The CFTC’s action is the first coordinated effort with both ICE and CME Group Inc., which owns and operates CME, COMEX, and CBOT, as part of the Division of Enforcement’s Spoofing Task Force. James McDonald, Director of Enforcement, stated the CFTC is “committed to working closely with our regulatory partners to hold wrongdoers accountable” and will “continue to take aggressive action against spoofing.”
Delovitch, Kansal, and Johnson will each pay a $100,000 civil monetary penalty and are suspended for four months from trading on any CFTC-designated exchange or registered entity. All four respondents are ordered to cease and desist from violating the Commodity Exchange Act’s spoofing prohibition. ARB Trading Group LP will pay a $445,000 civil monetary penalty.
The investigation revealed that Delovitch spoofed contracts from May 2017 to December 2017, Johnson from March 2017 to July 2017, and Kansal from May 2018 to April 2019 and again from May to June 2020. ARB Trading was found vicariously liable for the actions of its employees and subsidiaries, including two additional traders who engaged in spoofing activity between May 2018 and December 2019.
Parallel disciplinary actions were announced today by CME Group against Johnson, Delovitch, and a subsidiary of ARB Trading, 303 Proprietary Trading. ICE also announced actions against Kansal, two additional traders, and another ARB Trading subsidiary, ARB Trading Group North. The CFTC considered these penalties when determining its own fines.
The CFTC acknowledged the assistance of CME Group and ICE in the investigation.
Source: CFTC.gov
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