A Connecticut federal judge laid three spoofing and three commodities fraud charges on former UBS trader Andre Flotron who was accused of trying to manipulate the precious metals futures market through the use of a trading tactic known as ‘spoofing’.
U.S. District Judge Jeffrey Alker Meyer axed fraud counts facing the ex-banker and blasted the authorities for mishandling the evidence to move his case to Illinois.
The complaint, filed last year in federal court in Connecticut, alleges that Flotron and unidentified co-conspirators devised and executed schemes to defraud other market participants through the illegal practice of spoofing.
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.
The complaint filing contained detailed allegations of spoof trades, in which Flotron made large orders for precious metals transactions that they had no intention of completing.
By placing large buy and sell orders that he never intended to fill, he sent a phoney 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.
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.