Precious Metals Crime and Fraud - Commodity Futures Trading Commission (CFTC)

Commodity Futures Trading Commission (CFTC) ……
 

The Commodity Futures Trading Commission (CFTC) today announced that Judge Steven C. Seeger of the U.S. District Court for the Northern District of Illinois issued final judgments and consent orders against James Vorley and Cedric Chanu, former precious metals traders, for spoofing and engaging in a deceptive or manipulative scheme, in violation of the Commodity Exchange Act (CEA) and CFTC regulations.

The orders impose a $150,000 civil monetary penalty on each defendant, a five-year ban from trading on or subject to the rules of any registered entity and from registering with the CFTC in any capacity, and require each to cease and desist from violating the CEA, as charged. The orders resolve the CFTC’s complaint filed against the defendants on January 26, 2018.

“This enforcement action demonstrates the CFTC’s commitment to aggressively pursuing individuals who spoof in our markets,” said CFTC Acting Director of Enforcement Vincent McGonagle. “As this case shows, we will continue to work vigorously to hold individuals accountable, and not just the companies that employ them, for misconduct in our markets.”

Case Background

The orders find that from approximately July 2011 through July 2013, while employed at Bank A, Vorley and Chanu each placed orders for COMEX gold, silver, platinum, and palladium futures contracts that they wanted to get filled (genuine orders) and entered orders for the same contract on the opposite side of the market that they intended to cancel before execution (spoof orders).

In placing the spoof orders, Vorley and Chanu intentionally or recklessly sent market participants signals of greater supply or demand to create the misimpression that the price would move up or down and to trick market participants to transact on smaller, genuine orders that they placed on the opposite side of the market. The orders conclude that the defendants’ conduct constituted spoofing and a deceptive or manipulative scheme in violation of the CEA and CFTC regulations.

The CFTC appreciates the assistance of CME Group in connection with this matter.

The Division of Enforcement staff members responsible for this case are Devin Cain, Katie Rasor, Janine Gargiulo, Ben Sedrish, Brandon Wozniak, Alben Weinstein, Patryk J. Chudy, Lenel Hickson, Jr., and Manal M. Sultan. The Division of Enforcement’s Spoofing Task Force also provided assistance.

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CFTC’s Precious Metals Customer Fraud Advisory

The CFTC has issued several customer protection Fraud Advisories that provide the warning signs of fraud, including the Precious Metals Fraud Advisory, which alerts customers to precious metals fraud and lists simple ways to spot precious metals scams.

The CFTC also strongly urges the public to verify a company’s registration with the CFTC before committing funds. If unregistered, a customer should be wary of providing funds to that entity. A company’s registration status can be found at NFA BASIC.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the Whistleblower Office. Whistleblowers are eligible to receive between 10% and 30% of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.
 

1 COMMENT

  1. 1N 2013 I HAD 60 ONE OZ US GOLD EAGLES THAT I HAD ACCUMULATED SINCE 2004 AND THE PRICE OF GOLD WAS WELL OVER $1800 AN OZ. THE PRICE OF GOLD HAD BEEN RISING CONSISTENTLY WITH NO SIGNIFICANT DIPS IN THE MARKET. HOWEVER, AROUND FEB/MAR 2013 THE PRICE OF GOLD PLUMMETED OVERNIGHT TO $1200 AN OZ. AND I LOST AT LEAST $40,000. I KNEW AT THE TIME THERE MUST HAVE BEEN FRAUD INVOLVED IN THE GOLD MARKET TO ACCOUNT FOR THIS BUT I DID NOT KNOW HOW TO APPEAL FOR HELP.

    IF THERE ARE ANY PROVISIONS FOR RESTITUTION TO CONSUMERS AS A RESULT OF THIS CASE, PLEASE NOTIFY ME HOW I CAN APPLY FOR RESTITUTION.

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