Chicago-based proprietary trading firm Geneva Trading USA, LLC has been ordered to pay $1.5 million to settle charges of spoofing, the Commodity Futures Trading Commission (CFTC) announced today. The settlement, finalized through an Order filed by the CFTC, alleges that Geneva engaged in the manipulative trading practice through the actions of three of its traders – identified as Trader A, Trader B, and Trader C.
The CFTC found that the traders consistently employed a pattern of placing small orders on one side of a market while simultaneously placing larger, offsetting orders on the opposite side. These larger orders were frequently modified to avoid execution before ultimately being cancelled. The agency alleges this tactic was used to create or amplify imbalances in the order book, inducing other market participants to trade against the smaller, initial order.
The alleged spoofing activity spanned multiple futures contracts and time periods. Trader A engaged in the practice from January 1, 2013, to December 31, 2013, trading gold, heating oil, RBOB gasoline, and platinum futures. Trader B similarly operated between January 1, 2013, and December 31, 2013, focusing on light sweet crude oil. Trader C’s activity extended from June 1, 2015, to October 21, 2016, and encompassed feeder cattle, lean hogs, live cattle, Kansas City wheat, Soft Red Winter wheat, soybean meal, and soybeans.
According to the CFTC, Geneva’s early resolution of the matter and cooperation with the investigation were factors in reducing the civil monetary penalty. The company also reportedly remediated and enhanced its compliance systems and policies related to manipulative trading and spoofing.
“This case shows our continued commitment to rooting out disruptive trade practices like spoofing from our markets,” said James McDonald, CFTC Director of Enforcement. “Participants… must have confidence that these markets will not be distorted by the unlawful activity of others.”
The CFTC acknowledged the assistance of the CME Group in the investigation, which was conducted by the agency’s Spoofing Task Force. Staff members Amanda Burks, Raagnee Beri, Alison Sizemore, Michelle Bougas, Daniel C. Jordan, and Rick Glaser were responsible for the case.
Source: CFTC.gov
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