Mount Kisco, NY – July 25, 2019 – The U.S. Commodity Futures Trading Commission (CFTC) today announced charges against Corey D. Flaum, a former precious metals trader, for engaging in a pattern of spoofing and manipulative conduct in the futures markets. The CFTC found that Flaum, while employed at two separate New York banks between 2007 and 2016, placed orders he intended to cancel before execution to create false signals of buying or selling interest.
The agency alleges that these “spoof” orders were designed to deceive other market participants into trading against orders Flaum and his colleagues actually wanted filled, benefiting the banks involved. The CFTC order requires Flaum to cease and desist from violating the Commodity Exchange Act and related regulations prohibiting spoofing, manipulation, and deceptive practices.
Flaum entered into a formal cooperation agreement with the CFTC’s Division of Enforcement. As part of that agreement, the CFTC is reserving its determination regarding any sanctions against Flaum until his cooperation is substantially complete. Separately, the Department of Justice’s Fraud Section has announced a criminal action against Flaum, in which he pleaded guilty to one count of attempted commodities price manipulation (United States v. Flaum, Case No. 19-CR-338, E.D.N.Y.).
The CFTC also announced charges against John Edmonds of Brooklyn, New York, for similar spoofing activity. Edmonds, while employed at a New York bank between 2009 and 2015, allegedly placed orders with the intent of canceling them before execution, falsely inducing other market participants to trade against his desired orders. The CFTC found that Edmonds, his employer, and others financially benefitted from this conduct. Edmonds has already pleaded guilty to one count of commodities fraud and one count of conspiracy to commit wire fraud, commodities fraud, commodities price manipulation, and spoofing in federal court (United States v. E). Like Flaum, Edmonds has a cooperation agreement with the CFTC, with sanctions reserved pending completion of his cooperation.
James McDonald, Director of Enforcement at the CFTC, stated that the enforcement actions demonstrate the agency’s commitment to aggressively pursuing individuals and entities engaged in spoofing and manipulation, and highlighted the agency’s willingness to consider cooperation agreements when assessing sanctions.
Source: CFTC.gov
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