Washington, D.C. – Two former Citigroup Global Markets Inc. traders have been penalized by the Commodity Futures Trading Commission (CFTC) for engaging in a manipulative trading practice known as spoofing. Stephen Gola and Jonathan Brims were each charged with placing bids and offers with the intent to cancel them before execution, disrupting U.S. Treasury futures markets.
The CFTC issued orders requiring Gola to pay a $350,000 civil monetary penalty and Brims to pay $200,000. Both traders are banned from trading in the futures markets for a period extending six months after full payment of their respective penalties. They are also ordered to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing.
According to the CFTC, between July 16, 2011, and December 31, 2012, Gola and Brims engaged in spoofing more than 1,000 times across various Chicago Mercantile Exchange (CME) U.S. Treasury futures products. Their strategy involved placing large orders – 1,000 lots or more – with the intention of canceling them before they could be filled. These spoofing orders were strategically placed after smaller bids or offers were made, aiming to create or worsen imbalances in the order book.
The investigation revealed that Gola and Brims sometimes coordinated their spoofing activities with other traders on the Citigroup U.S. Treasury Desk. In some instances, they placed spoofing orders after a colleague had already placed smaller resting orders. Conversely, other traders would place spoofing orders to benefit the smaller resting orders of Gola and Brims.
This case follows a previous CFTC order against Citigroup itself for related violations of the Commodity Exchange Act and Regulations, issued on January 19, 2017. The CFTC acknowledged the assistance of the CME in the investigation. The case was led by CFTC staff members Margaret Aisenbrey, Christopher Reed, Allison Sizemore, Jessica Harris, Jennifer Blakley, Steve Yang, Daniel Jordan, Rick Glaser, and Charles Marvine.
Source: CFTC.gov
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