Chicago, IL – Navinder Singh Sarao has been ordered to pay $38,614,761.78 in penalties and disgorgement for market manipulation, according to a Consent Order entered by Judge Andrea R. Wood of the U.S. District Court for the Northern District of Illinois. The Commodity Futures Trading Commission (CFTC) brought the enforcement action against Sarao and his company, Nav Sarao Futures Limited PLC.
The CFTC charged Sarao with unlawful manipulation, attempted manipulation, and spoofing related to E-mini S&P 500 near month futures contracts traded on the Chicago Mercantile Exchange (CME). The E-mini S&P 500 is a widely traded stock market index futures contract.
Aitan Goelman, CFTC Director of Enforcement, stated the case demonstrates the dangers of spoofing, highlighting how Sarao’s orders distorted prices and harmed other market participants. The CFTC’s pursuit of this behavior, regardless of location, was emphasized.
Sarao admitted to the allegations outlined in the CFTC Complaint and the findings within the Order. The Order details a scheme to manipulate the price of the E-mini S&P 500 using both automated and manual spoofing tactics. These tactics were designed to create artificial price swings for exploitative trading.
Specifically, Sarao employed a dynamic layering program that placed large sell orders in the E-mini S&P order book, strategically spaced apart. These orders were repeatedly modified to remain just out of reach of execution, before ultimately being cancelled. A “back-of-queue” program was also utilized to influence prices while minimizing the chance of trades, and manual spoofing techniques were employed to place and cancel large orders without intent to execute.
The Order finds Sarao placed thousands of spoof orders to create a false impression of market supply and demand, inducing other traders to act in ways they wouldn’t have otherwise. This artificial activity was intended to manipulate prices and trading volumes. The court permanently prohibits Sarao from further violations of the Commodity Exchange Act and CFTC Regulations and imposes permanent trading and registration bans.
Source: CFTC.gov
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