Jim Lundy Appointed as Independent Monitor in the CFTC v. 3Red Trading & Oystacher Manipulative Trading / Spoofing Matter
Chicago partner Jim Lundy was appointed by the Honorable Judge Amy J. St. Eve of the U.S. District Court for the Northern District of Illinois to serve as the independent monitor for one of the first “spoofing” manipulative trading enforcement actions instituted by the Commodities Futures Trading Commission (CFTC). Jim’s appointment is part of a settlement between the CFTC and 3Red Trading LLC and its principal, Igor B. Oystacher, entered on December 20, 2016. Over the next three years, Jim will be responsible for monitoring the trading of 3Red and Oystacher, and identifying any future violations of the Commodity Exchange Act and CFTC Regulations as charged and pursuant to a monitoring agreement.
The CFTC filed its initial complaint on October 19, 2015. In its complaint, the CFTC alleged the employment of manipulative trading / spoofing by the Defendants in the markets … Read More »
On the heels of its successful prosecution of Michael Coscia for spoofing, the Department of Justice (“DOJ”) recently secured a guilty plea and cooperation agreement in another high-profile “spoofing” case. By way of background, spoofing is the illegal practice of placing trades on the bid or offer side of a market with the intent to cancel them before execution in order to manipulate prices for personal gain. On November 9, 2016, Londoner Navinder Singh Sarao pleaded guilty to two criminal charges after losing his battle against extradition from the UK. Despite being charged with 22 counts, including wire fraud, commodities fraud, and spoofing, Mr. Sarao pleaded guilty to just two counts—one count of wire fraud, 18 U.S.C. § 1343 (which carries a maximum of 20 years’ imprisonment and a fine of $250,000) and one count of spoofing, 7 U.S.C. § … Read More »
The SEC filed a settled administrative proceeding against an owner of a New Jersey based brokerage firm for engaging in an illegal “layering” or “spoofing” scheme that resulted in unlawful profits of almost $1 million. See SEC press release.
Market manipulation always has been a high priority for the SEC’s Enforcement Division and encompasses a broad range of activities that distort the natural forces of supply and demand. “Layering” or “spoofing” manipulation schemes involve placing a series of non-bona fide orders and then immediately canceling the orders before they are executed. These schemes create the illusion of demand resulting in an artificial increase in the market price of a security. The activity generally spurs the interest of other investors who place orders—thinking that the stock is “hot” and the increased activity is legitimate. After the manipulator stops entering orders, the price … Read More »