European Banks Pay $46.6 Million to Settle U.S. ‘Spoofing’ Charges

The comments above & below is an edited and abridged synopsis of an article by Michelle Price

Three European banks paid a settlement of $46.6 million, and 8 individuals were charged, in a US probe into alleged manipulation of the futures and commodities market.

Deutsche Bank, UBS, HSBC and former traders at the banks, as well as individuals at other firms, were charged following a multi-agency probe into spoofing in metals and equities futures, the US Justice Department and the country’s derivatives regulator said.

It was the first time the Justice Department and the Commodity Futures Trading Commission (CFTC) worked together, along with the Federal Bureau of Investigation, to bring criminal and civil charges against multiple companies and individuals, underlining their increased focus on holding individuals accountable for corporate wrongdoing.

Spoofing involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions.

Deutsche Bank and UBS have agreed to pay $30 million and $15 million respectively to settle the civil charges in the case, while HSBC will pay $1.6 million, the CFTC said.

All 3 banks received reduced penalties from the CFTC for providing significant assistance in the investigations, which relate to activity that dates back as far as 2008. UBS reported the alleged misconduct by its traders to the regulator, the CFTC said.

A Deutsche Bank spokesman said the bank “has provided substantial and proactive cooperation with the government’s investigation and has enhanced controls and surveillance to help ensure that the underlying conduct does not occur in the future.”