Compliance

Trio Of Global Banks To Pay $46 Million In DoJ "Spoofing" Charges Settlement

Josh O'Neill Assistant Editor 1 February 2018

Trio Of Global Banks To Pay $46 Million In DoJ

The US Department of Justice is continuing to crack down on market malpractice, fining three banking behemoths a total of $46 million over allegations they manipulated two futures markets.

The US Department of Justice (DoJ) has charged eight individuals from three banking giants over allegations they manipulated the futures markets for precious metals and share indexes, through a process known as “spoofing”.

UBS, the world’s largest wealth manager, HSBC and Deutsche Bank will pay a combined total of $46.6 million to settle the charges against them. Seven of the individuals charged are traders and one is a technology consultant. 

Spoofing refers to traders submitting, then cancelling, orders on futures contracts to manipulate the quoted price. 

In this instance, the traders are alleged to have placed hundreds of bogus orders that they never intended to fulfil. By creating a mirage for extra demand they altered prices and the behaviour of other market players through moves they could then exploit for their own gain. 

The DoJ's acting ssistant attorney general, John Cronan, said the alleged conduct "reflects a disturbing and reckless trend of individuals and companies seeking to put illicit gains and profits above honest and law abiding conduct".

He said the result was that the spoofers were "harming innocent investors and putting the very integrity of our financial markets at risk”.

Deutsche Bank, Germany’s largest lender, will pay $30 million. UBS agreed to a $15 million settlement and HSBC was fined $1.6 million. 

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