HOUSTON, TX – Federal regulators have accused New York resident Krishna Mohan of engaging in a widespread spoofing scheme impacting major futures markets. The Commodity Futures Trading Commission (CFTC) filed a complaint in the U.S. District Court for the Southern District of Texas alleging Mohan repeatedly placed fake orders with the intent of manipulating prices between November 25, 2013, and December 17, 2013.
The CFTC alleges Mohan, while employed by a proprietary trading firm, utilized a technique known as “spoofing” – submitting orders he never intended to fulfill – to deceive other traders in the E-mini Dow ($5) and E-mini NASDAQ 100 futures contracts on the Chicago Board of Trade and Chicago Mercantile Exchange. The scheme involved placing large, partially visible “iceberg” orders alongside fully visible “spoof” orders intended for immediate cancellation.
According to the complaint, Mohan’s actions were designed to create a false impression of market demand or supply, tricking other participants into trading at prices favorable to him. Evidence cited includes documents found in Mohan’s Google Drive detailing “Smart Stuffing” strategies, explicitly outlining the use of deceptive orders meant to “control which side they want to show [the] bluff” and were “not meant to be traded.”
The CFTC claims Mohan executed this pattern of conduct approximately 1,500 times, involving over 36,000 individual instances of spoofing. James McDonald, CFTC’s Director of Enforcement, stated the alleged behavior involved “tens of thousands of spoof orders” placed over a short period, highlighting the agency’s commitment to combating market manipulation.
The CFTC is seeking civil monetary penalties, a permanent ban from trading and registration, disgorgement of ill-gotten gains, and a permanent injunction against future violations of the Commodity Exchange Act and related regulations. The agency acknowledged assistance from the CME Group’s Market Regulation Department, the U.S. Department of Justice, and the Federal Bureau of Investigation in the ongoing investigation.
Source: CFTC.gov
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