Spoofing typically involves flooding derivatives markets with orders that traders don't intend to execute to trick others into moving prices in a desired direction. The practice has become a focus for prosecutors and regulators in recent years after lawmakers specifically prohibited it in While submitting and canceling orders isn't illegal, it is unlawful as part of a strategy intended to dupe other traders.
More than two dozen individuals and firms have been sanctioned by the Justice Department or the CFTC, including day traders operating out of their bedrooms, sophisticated high-frequency trading shops, and big banks such as Bank of America Corp.
The Justice Department took a much more aggressive tack with JPMorgan by alleging that the bank hosted an eight-year market manipulation conspiracy with its precious metals desk as a criminal racketeering operation. The agency has already charged six JPMorgan traders for manipulating metals futures between and On Friday, meanwhile, two former Deutsche Bank AG traders were found guilty here by a federal jury of spoofing, the agency said.
The Justice Department said it took the previous plea into account in determining penalties. Join ST's Telegram channel here and get the latest breaking news delivered to you. We have been experiencing some problems with subscriber log-ins and apologise for the inconvenience caused.
Until we resolve the issues, subscribers need not log in to access ST Digital articles. But a log-in is still required for our PDFs. Skip to main content. Members of JPMorgan's Treasuries desk openly discussed their illegal strategies via chats. Share gift link below with your friends and family. Link Copied! Copy gift link. Sign up or log in to read this article in full.
Sign up. Spoofing was banned as part of the Dodd-Frank financial reform law after the financial crisis. In recent years, regulators and federal prosecutors have cracked down on suspected spoofing, issuing fines or filing criminal charges in a number of cases. The spoofing lawsuit filed against J. Morgan in U. District Court in Manhattan, which court documents reveal was settled this summer, was filed in by Daniel Shak, the colorful hedge fund operator and high-stakes poker player, and two metals traders, Mark Grumet and Thomas Wacker.
The three plaintiffs had accused J. Morgan of manipulating the silver futures market from through through spoofing trades. The three claimed they lost tens of millions of dollars as a result of the actions of J.
Morgan traders. The bank for years denied the allegations, and in succeeded in getting the plaintiffs's claims dismissed by a judge.
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