A Dubai-based proprietary trading firm settled CFTC charges that (i) an employee engaged in multiple acts of spoofing and (ii) the firm lacked adequate policies and procedures to prevent the spoofing activity.
In an Order, the CFTC claimed that a trader employed by Arab Global Commodities DMCC ("AGC"), a registered broker and clearing member of Dubai Gold and Commodity Exchange, regularly made use of an illegal spoofing strategy on the Commodity Exchange, Inc. According to the CFTC, the trader would (i) place a small order on one side of the market, (ii) place a large order on the opposite side to create the false impression of market depth, and (iii) cancel the large order before fulfillment.
The CFTC determined that AGC had no anti-spoofing policies or procedures in place, did not appropriately train employees to avoid engaging in spoofing, and did not adequately monitor employees' trading activity to detect spoofing. Further, the CFTC asserted that AGC did not respond appropriately to a warning from its futures commission merchant regarding the trader's conduct.
To settle CFTC charges alleging violations of CEA Section 4(a)(5)(C), AGC will pay a $300,000 monetary penalty. The CFTC noted that, in accepting the offer of settlement, AGC cooperated throughout the investigation and implemented remedial measures to prevent future misconduct.
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