Minneapolis-based Walleye Capital LLC will pay $550,000 in penalties to settle charges of spoofing brought by the Commodity Futures Trading Commission (CFTC), the agency announced Monday. The CFTC found Walleye vicariously liable for the actions of a former trader who engaged in manipulative trading practices on the Chicago Board of Trade (CBOT) between December 2018 and May 2019.
The order details that the former Walleye trader repeatedly placed bids or offers for soybean futures, soybean meal futures, and soybean oil futures with the intent to cancel them before they could be executed. This tactic, known as spoofing, is illegal because it creates a false impression of market demand or supply, potentially influencing prices and harming other market participants.
According to the CFTC, the trader employed multiple spoofing techniques. These included “cross-product spoofing” – attempting to manipulate prices in one soybean product to benefit orders in another – and “cross-calendar spoofing,” using different contract expiration months to achieve the same deceptive effect. The trader also engaged in “single-product spoofing” within the same product and expiration month.
“This enforcement action demonstrates the CFTC’s commitment to vigorously detect unlawful spoofing conduct, particularly when traders seek to avoid detection by engaging in cross-product spoofing,” stated Acting Director of Enforcement Gretchen Lowe. The agency’s investigation focused on identifying and proving the manipulative intent behind the trader’s actions.
While the CFTC order does not name the individual trader, it holds Walleye Capital LLC responsible for failing to adequately supervise its employee and prevent the illicit activity. The $550,000 civil monetary penalty is intended to deter future misconduct and underscore the importance of compliance with CFTC regulations. The case was led by Anthony Biagioli, Allison Sizemore, Nick Sloey, Jeff Le Riche, Christopher Reed, and Charles Marvine, with contributions from the Division of Enforcement Spoofing Task Force.
Source: CFTC.gov
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