Washington, D.C. – The Commodity Futures Trading Commission (CFTC) has settled charges against Mirae Lee, a trader with Daewoo Securities Co. Ltd., for spoofing in the Chicago Mercantile Exchange (CME) E-mini S&P 500 futures market. The case, filed January 13, 2020, alleges that Lee engaged in manipulative trading practices while working in Daewoo’s Seoul office.
According to the CFTC order, between December 2014 and April 2016, Lee implemented a three-step spoofing strategy. This involved placing large, intentionally deceptive orders – the “spoof orders” – on one side of the market with no intention of executing them. These orders were designed to create a false impression of market depth and entice other traders to react. Lee would then place a smaller, genuine order on the opposite side of the market, capitalizing on the activity generated by the spoof orders. Immediately after the genuine order was filled, the spoof orders were cancelled before they could be executed.
The CFTC found that this conduct violated the Commodity Exchange Act’s prohibition on spoofing, a form of market manipulation. Mirae Asset Daewoo Co., Ltd., which acquired Daewoo Securities, is responsible for Lee’s actions and will pay a $700,000 civil monetary penalty as part of the settlement. The CFTC acknowledged Mirae’s cooperation in the investigation, which led to a reduction in the penalty amount.
“This enforcement action demonstrates, once again, that the Commission will hold overseas entities that spoof in our markets accountable,” stated CFTC Director of Enforcement James McDonald. The CFTC also expressed gratitude for the assistance provided by the CME Group Inc., the Financial Services Commission of the Republic of Korea, and the United Kingdom Financial Conduct Authority in the investigation.
The case was led by CFTC staff members Jonah E. McCarthy, Jennifer L. Blakley, Dmitriy Vilenskiy, A. Daniel Ullman II, Christine Ryall, and Paul G. Hayeck.
Source: CFTC.gov
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