Chicago, IL – Federal regulators have accused Australian national Jiongsheng Zhao of market manipulation through a sophisticated spoofing scheme targeting the E-mini S&P 500 futures contract market. The Commodity Futures Trading Commission (CFTC) filed a complaint in the U.S. District Court for the Northern District of Illinois alleging Zhao engaged in the illegal practice from July 2012 through March 2017.
According to the CFTC, Zhao repeatedly placed orders he intended to cancel before execution – a tactic known as spoofing. This involved entering a desired order and then immediately submitting a larger order on the opposite side of the market, designed to create a false impression of supply or demand. The intent was to manipulate other traders into reacting to the deceptive orders, allowing Zhao to profit from the resulting price movements.
The complaint details approximately 2,300 instances of this pattern of conduct, encompassing 3,100 separate acts of spoofing. By injecting these false signals into the market, the CFTC alleges Zhao gained an unfair advantage over legitimate traders, undermining market integrity.
“By injecting false information into our markets, spoofers gain an unfair advantage over law-abiding market participants, thereby hindering competition and undermining the integrity of our markets,” stated James McDonald, CFTC’s Director of Enforcement. “That’s why the CFTC is committed to identifying this type of misconduct and holding the responsible individuals accountable.”
The CFTC is seeking civil monetary penalties, disgorgement of any ill-gotten gains, a ban on future trading and registration, and a permanent injunction preventing Zhao from further violations of commodities laws. The agency received assistance in its investigation from the U.S. Department of Justice, the Federal Bureau of Investigation, the Chicago Mercantile Exchange (CME), and the Australian Securities & Investments Commission.
The case is being pursued by the CFTC’s Spoofing Task Force, with staff members Laura Brookover, Allison Sizemore, Jordon Grimm, Carlin Metzger, Joyce Brandt, Christopher Reed, and Charles D. Marvine leading the charge.
Source: CFTC.gov
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