Chicago, IL – October 19, 2015 – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint against Igor B. Oystacher, of Chicago, Illinois, alleging a manipulative trading scheme known as spoofing. The complaint, filed in the U.S. District Court for the Northern District of Illinois, also names Oystacher’s company, 3 Red Trading LLC, as a co-defendant.
According to the CFTC, Oystacher and 3 Red engaged in spoofing on at least 51 trading days between December 2011 and January 2014. The alleged scheme involved placing large, passive orders intended to be canceled before execution – known as “spoof orders” – to create a false impression of market depth. These orders were placed across multiple exchanges, including the Chicago Mercantile Exchange (CME), New York Mercantile Exchange (NYMEX), Commodity Exchange Inc. (COMEX), and CBOE Futures Exchange (CFE).
The CFTC alleges that Oystacher and 3 Red targeted futures contracts for E-Mini S&P 500, crude oil, natural gas, copper, and the volatility index (VIX). By creating this illusion of market interest, they aimed to induce other traders to place orders, then “flip” their position by canceling the spoof orders and executing aggressive trades against those induced orders.
This strategy, the CFTC claims, allowed Oystacher and 3 Red to obtain more favorable prices and quantities of futures contracts than would have been possible under normal market conditions. The alleged conduct harmed other market participants and undermined the integrity of the futures markets.
“Spoofing seriously threatens the integrity and stability of futures markets because it discourages legitimate market participants from trading,” stated Aitan Goelman, the CFTC’s Director of Enforcement. “The CFTC is committed to prosecuting this conduct and is actively cooperating with regulators around the world in this endeavor.”
The CFTC has not specified the penalties sought from Oystacher and 3 Red in the press release. The case is ongoing, and further details regarding potential fines and other sanctions will be revealed as the legal proceedings unfold. The CFTC’s Enforcement Division received assistance from multiple market regulation departments and international regulatory bodies, including the Financial Conduct Authority (FCA) of the United Kingdom.
Source: CFTC.gov
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