US regulator CFTC recently settled a spoofing case with the South Korean financial services institutions Mirae Asset Daewoo. Daewoo Securities agreed to pay $700,00 fine, but neither admitted nor denied the allegations of fraud by the CFTC.
January 14, 2020, | AtoZ Markets – The US Commodity Futures Trading Commission (CFTC) on Tuesday charged Mirae Asset Daewoo $700,000 for spoofing trades. The South Korean based firm allegedly entered spoof orders on the Chicago Mercantile Exchange (CME).
CFTC cracks down on fraud operation by Daewoo Securities
Mirae acquired the company in the midst of this event, with the former traders of Daewoo Securities Co Ltd having been embroiled with the spoofing case. Former traders within the company placed to buy or sell futures contracts on the CME on many occasions, with the express intent of canceling them before execution.
Moreover, this spoofing scheme has run for at least a year. It started in December 2014 and ending in April 2016, as far as the CFTC can determine. The spoofing activities focused mainly on E-mini S&P 500 contracts that the CME lists on its futures market.
Praises of cooperation
With the settlement of this case by the CFTC, Daewoo will be forced to pay $700 000 in fines. As is the case with many of these things, Daewoo neither confirmed nor denied these allegations. Something of note is that the CFTC is singing the praises of Mirae.
The reason is that the firm has given cooperation after learning of the misconduct of the subsidiary. According to the CFTC, this reduced the monetary penalty and sped up the resolution of the matter.
Spoofing creates market ruckus
For general knowledge, spoofing is an illegal form of market manipulation in which a trader places a large order to buy or sell a financial asset, such as a stock, bond or futures contract, with no intention of executing. By doing so, the trader—or “the spoofer”— create an artificial impression of high demand for the asset.
Tower Research Capital, HSBC, and UBS have received fines for fraudulent operations by employees, the largest of which was a fine of $ 30 million for Deutsche Bank, Germany’s largest bank. UBS also find themselves facing similar charges, had some stock traders the group’s use of false orders, manipulation of the New York Mercantile Exchange, the precious metals futures trading.
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