Former UBS commodities trader Andre Flotron is in trouble with US authorities. He was arrested while visiting his girlfriend in New Jersey in the latest case of spoofing on the CME Group’s commodities exchange.
Flotron, 54, worked at the giant Swiss bank in Switzerland and Stamford. The Justice Department’s case accused him of manipulating precious metal prices by using fake orders to make it look as if there was genuine activity, an illegal practice called spoofing.
According to a report from Bloomberg, the complaint filing contained detailed allegations of spoof trades, in which Flotron and unidentified co-conspirators made large orders for precious metals transactions that they had no intention of completing.
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By placing large buy and sell orders that they never intended to fill, they sent a phony signal that tricked competitors and moved the market, allowing Flotron to quickly cancel those orders and make real trades in the opposite direction, the complaint alleges.
UBS, which wasn’t charged in the spoofing case and whose shares were little changed today, has reached multiple settlements with US regulators in recent years on issues including metals prices rigging.
Working with the CFTC, prosecutors in the US have been developing spoofing cases across markets since the 2010 adoption of the Dodd-Frank financial law, which made the practice illegal.
“By placing a large-volume order for precious metals futures contracts at certain price levels with the intent, at the time the order was placed, to cancel the order before execution, FLOTRON created the false appearance of substantial supply or demand to fraudulently induce other market participants to react to his deceptive market information,” according to the complaint filed in federal court in Connecticut.