Washington D.C. – Morgan StanleyCapital Group Inc. has been slapped with a $1.5 million penalty by the Commodity Futures Trading Commission (CFTC) for engaging in spoofing – a form of market manipulation – in the precious metals futures markets. The CFTC issued an order on Monday, September 30, 2019, detailing the charges and settlement.
According to the CFTC, Morgan Stanley engaged in spoofing practices on multiple occasions between November 2013 and November 2014. Spoofing involves placing orders with the intent to cancel them before execution, creating a false impression of market demand and manipulating prices. The firm did not admit or deny the findings but agreed to settle the charges.
The order mandates that Morgan Stanley cease and desist from violating the spoofing prohibition outlined in the Commodity Exchange Act (CEA). Furthermore, the firm is required to enhance its internal controls, training programs, and systems to better detect and prevent future instances of spoofing within the futures markets.
The CFTC acknowledged Morgan Stanley’s “significant cooperation” throughout the investigation. The agency noted that this cooperation, along with remediation efforts undertaken by the firm, contributed to a reduction in the civil monetary penalty. Without cooperation, the penalty could have been substantially higher.
The case was led by CFTC Division of Enforcement staff members Lara Turcik, Brandon Wozniak, Candice Aloisi, Lenel Hickson, Jr., and Manal M. Sultan. The investigation highlights the CFTC’s ongoing commitment to policing manipulative practices in the commodities markets and ensuring fair trading conditions.
Source: CFTC.gov
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