Chicago, IL – Edge Financial Technologies, LLC, an Illinois-based software firm, has been permanently barred from providing computer programming services for trading in regulated markets after being found liable for aiding and abetting a manipulative spoofing scheme. The U.S. District Court for the Northern District of Illinois entered a consent order on September 15, 2020, resolving a 2018 enforcement action brought by the Commodity Futures Trading Commission (CFTC).
The CFTC alleged that Edge assisted Trader A in spoofing E-mini S&P futures contracts between January 30, 2013, and October 30, 2013. Edge programmed a custom software application, including a feature known as “Back-of-Book,” specifically designed to facilitate the manipulative activity. This function concealed Trader A’s orders from immediate execution and automatically cancelled them upon partial fulfillment, creating the illusion of false supply and demand.
According to the court order, Edge was aware that Trader A intended to use the Back-of-Book function for spoofing and to deceive other market participants. The software was intentionally designed to help Trader A place large, deceptive orders and influence trading decisions based on false information. The court permanently enjoined Edge from selling or possessing any application that includes the Back-of-Book function.
As a result of the violations, Edge Financial Technologies will disgorge $24,200 and pay a civil monetary penalty of $48,400, totaling $72,600 in monetary relief. The CFTC emphasized that this case establishes civil liability for entities aiding and abetting illegal spoofing and manipulation.
“When technology is intended to inject false information into the market, the CFTC will respond to protect market participants and the integrity of the markets we regulate,” said James McDonald, Director of the Division of Enforcement. “We will not hesitate to bring charges against entities and individuals for similar conduct in the future.”
The CFTC acknowledged assistance from the United Kingdom Financial Conduct Authority, CME Group, the Department of Justice, and the Federal Bureau of Investigation in the investigation.
Source: CFTC.gov
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