Morgan Stanley / Mitsubishi CFTC Fine - Spoofing

By Commodity Futures Trading Commission ……
 

On Tuesday, October 1, the U.S. Commodity Futures Trading Commission today announced that civil enforcement actions were filed and simultaneously settled against two trading firms and one bank for violating the Commodity Exchange Act’s (CEA) prohibition on spoofing (bidding or offering with the intent to cancel the bid or offer before execution). These cases were brought in connection with the Division of Enforcement’s Spoofing Task Force.

“As these cases demonstrate, the CFTC is committed to preserving the integrity of our markets—like the financial and precious metals futures markets at issue here—and to rooting out unlawful practices like spoofing,” said CFTC Enforcement Director James McDonald. “We will continue to vigilantly investigate and prosecute misconduct by entities that spoof in our markets.”

Enforcement Action Against Morgan Stanley Capital Group Inc.

The CFTC on Monday, September 30, 2019 issued an order filing and settling charges against Morgan Stanley Capital Group Inc. for engaging in spoofing on multiple occasions in the precious metals futures markets from at least November 2013 to November 2014. The order requires Morgan Stanley to pay a civil monetary penalty of $1.5 million, to cease and desist from violating the CEA’s spoofing prohibition, and to take specified steps to implement and strengthen its training, its systems, and its controls to detect and deter spoofing in the futures markets.

The order recognizes Morgan Stanley’s significant cooperation with the CFTC’s investigation, and notes that Morgan Stanley’s cooperation and remediation resulted in a reduced civil monetary penalty.

The Division of Enforcement staff members responsible for this case are Lara Turcik, Brandon Wozniak, Candice Aloisi, Lenel Hickson, Jr., and Manal M. Sultan.

Enforcement Action Against Mitsubishi International Corporation

Also on Monday, September 30, the CFTC issued an order filing and settling charges against Mitsubishi International Corporation for engaging in multiple acts of spoofing on the Commodity Exchange, Inc. markets for silver and gold futures. This conduct occurred between at least April 2016 and January 2018. The order finds that Mitsubishi engaged in this unlawful activity through one of its traders who accessed these markets via an affiliate’s London office. The order requires Mitsubishi to pay a $400,000 civil monetary penalty and to cease and desist from violating the CEA’s spoofing prohibition.

The order recognizes that Mitsubishi promptly self-reported the misconduct and proactively implemented remedial measures and process improvements to deter and detect similar misconduct. The timely self-report, cooperation, and remediation resulted in a significantly reduced civil monetary penalty.

The Division of Enforcement staff members responsible for this case are Philip Tumminio, Kara Mucha, and Rick Glaser.

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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.

Customers can report suspicious activities or information, such as possible violations of commodity trading laws, to the CFTC Division of Enforcement via a Toll-Free Hotline 866-FON-CFTC (866-366-2382) or file a tip or complaint online.
 

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