Founder of Chicago firm charged in crackdown on futures 'spoofing'

Reuters

"Conduct like this poses significant risk of eroding confidence in United States markets and creates an uneven playing field for legitimate traders and investors", John Cronan, the acting head of the Justice Department's criminal division, said in a statement. Congress outlawed the practice in 2010 as part of the Dodd-Frank Act.

Prosecutors said Coscia made more than $1 million manipulating the prices of gold and other commodity futures using computer-generated trading strategies.

Damaged reputation: Deutsche Bank has pledged to strengthen internal controls to prevent further illegal manipulation of markets, but the latest fine won't help its reputation in the U.S., where in recent years it paid $7.2 billion in fines for toxic mortgages issued ahead of the housing market collapse of 2008, was separately fined $2.5 billion for manipulation in the Libor scandal.

HSBC Holdings (LON:HSBA) has agreed to pay $1.6 million over a "spoofing" probe in the US.

The case against the banks was settled on Monday without any of them admitting or denying guilt. Citigroup neither admitted to nor denied the allegations.

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Spoofing involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. The probe received cooperation from all the banks.

A spokesman for HSBC said the bank was pleased to have resolved the matter. The two Fairfield County residents, Edward Bases of New Canaan and John Pacilio of Fairfield, were identified as precious metals traders at unnamed global financial institutions and were charged with spoofing phantom orders in the commodities market in order to profit on what other traders assumed were legitimate orders.

Mr. Flotron's lawyer, Marc Mukasey, said the new case "is an especially enormous waste of taxpayers' money because the CFTC knows darn well that there is a pending criminal matter, that Mr. Flotron has always been retired from the business, and that he lives in Switzerland".

Seven of the individuals charged are traders and one is a technology consultant. Edward Bases, 55, and John Pacilio, 53, both of CT and based in New York City, were charged in a criminal complaint with commodities fraud.

The cases mark the first major enforcement actions of 2018 for the CFTC and Mr. McDonald, who took over as enforcement director in April 2017.

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