A former precious metals trader pleaded guilty to manipulating the buying and selling of futures contracts by "injecting" materially false information into the precious metals futures contracts market.
According to the recently unsealed conviction filed in the U.S. District Court for the District of Connecticut, John Edmonds conspired with co-workers to enrich themselves and their bank employer by entering orders for precious metals futures contracts with the intent to cancel such orders before execution. The purpose of this conspiracy, according to the information, was to convey false information to the market regarding the supply and demand for such contracts in an effort to induce other traders to trade based upon such information and, thus, move the price of such contracts in a direction that was favorable to Edmonds and his co-conspirators. In his plea, Mr. Edmonds admitted to committing wire fraud, commodities fraud and price manipulation, and spoofing between 2009 and 2015.
Commentary
This case illustrates that the misconduct involved in spoofing may also provide the basis for a charge of price manipulation. In addition to alleging that the defendants engaged in spoofing "in order to make money and avoid losses," that is, to enrich themselves, the government also alleged that they entered such orders in order to "artificially move the price of precious metals futures contracts," i.e., to manipulate the price of such contracts.
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