By Commodity Futures Trading Commission ……
On Thursday, July 25, the U.S. Commodity Futures Trading Commission issued two orders filing and settling charges against former precious metals traders at separate financial institutions who entered into formal cooperation agreements with the CFTC’s Division of Enforcement and admitted to spoofing and manipulative conduct in the futures markets.
James McDonald, the Director of Enforcement, commented:
“[Thursday]’s enforcement actions send a clear message that spoofing and manipulation in our markets will not be tolerated and that the CFTC will use all of the tools in its arsenal to aggressively pursue individuals and entities who engage in this misconduct. These cases also show that, where an individual has demonstrated a commitment to cooperate and has cooperated, the CFTC may elect to postpone the assessment of the cooperator’s sanctions until the cooperation is substantially complete.”
Corey D. Flaum
In its order today settling charges against Corey D. Flaum of Mount Kisco, New York, the CFTC found that Flaum engaged in a pattern of spoofing in the precious metals futures market between 2007 and 2016 while employed at a New York bank and subsequently at the New York office of another bank. The order requires Flaum to cease and desist from violating the Commodity Exchange Act and CFTC regulations prohibiting spoofing, the use of manipulative or deceptive devices in connection with futures contracts, and price manipulation.
The order finds that Flaum and others at the banks placed futures orders they intended to cancel before execution, for the purpose of creating false signals of buying or selling interest. These spoof orders were placed to deceive other market participants into transacting against the orders Flaum and others wanted to be filled, at least in part for the benefit of the banks.
The order recognizes Flaum’s entry into a formal cooperation agreement with the Division and, pursuant to that agreement, reserves the CFTC’s determination as to sanctions against him.
Also on July 25, the Fraud Section of the Department of Justice’s Criminal Division announced a separate criminal action against Flaum. See United States v. Flaum, Case No. 19-CR-338 (E.D.N.Y.). Flaum pleaded guilty to one count of attempted commodities price manipulation.
In its order today settling charges against John Edmonds of Brooklyn, New York, the CFTC found that Edmonds engaged in a pattern of spoofing in the precious metals futures market between 2009 and 2015 while employed at a New York bank. The order requires Edmonds to cease and desist from violating the Commodity Exchange Act and CFTC regulations prohibiting spoofing and the use of manipulative or deceptive devices in connection with futures contracts.
The order finds that Edmonds and others placed futures orders they intended to cancel before execution, with the purpose of falsely inducing market participants to execute against the orders they wanted to be filled. The order further finds that Edmonds, his employer, and others benefitted financially from such conduct.
The order recognizes Edmonds’s entry into a formal cooperation agreement with the Division and, pursuant to that agreement, reserves the CFTC’s determination as to sanctions against him.
Edmonds previously pleaded guilty in federal court to one count of commodities fraud and one count of conspiracy to commit wire fraud, commodities fraud, commodities price manipulation, and spoofing. See United States v. Edmonds, Case No. 18-CR-239 (D. Conn).
The Division acknowledges and thanks the Fraud Section and the Federal Bureau of Investigation (FBI) for their assistance in these matters.
These cases are brought in connection with the Division’s Spoofing Task Force. The following staff members assisted in the Flaum case: Jonah McCarthy, Jennifer Blakley, Dmitriy Vilenskiy, and A. Daniel Ullman II.
The Division staff members responsible for these cases are Trevor Kokal, David C. Newman, Mark A. Picard, Steven I. Ringer, Jordon Grimm, Patrick Marquardt, Lenel Hickson, Jr., and Manal M. Sultan.
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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.