The US Commodity Futures Trading Commission (CFTC) has issued two separate orders filing and settling charges against Stephen Gola and Jonathan Brims for spoofing — bidding or offering with the intent to cancel the bid or offer before execution — in US Treasury futures markets while trading for Citigroup Global Markets.
The CFTC previously issued an order against Citigroup for its related violations of the Commodity Exchange Act and Regulations.
The Gola order requires Gola to pay a USD350,000 civil monetary penalty, and the Brims order requires Brims to pay a USD200,000 civil monetary penalty. Both traders are banned from trading in the futures markets until six months after each trader has made full payment of his respective penalty.
In addition, Gola and Brims are ordered to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing.
The orders find that, between 16 July 2011 and 31 December 2012, Gola and Brims each engaged in the disruptive practice of spoofing more than 1,000 times in various Chicago Mercantile Exchange (CME) US Treasury futures products. According to the orders, Gola’s and Brims’s spoofing strategy involved placing bids or offers of 1,000 lots or more with the intent to cancel those orders before execution. The spoofing orders were placed in the US Treasury futures markets after another smaller bid or offer was placed on the opposite side of the same or a correlated futures or cash market. Gola and Brims placed their spoofing orders to create or exacerbate an imbalance in the order book and cancelled their spoofing orders after either the smaller resting orders had been filled or the traders believed that the spoofing orders were at too great a risk of being executed.
In addition to executing the spoofing strategy individually, Gola and Brims coordinated with one or more Citigroup traders on the US Treasury Desk to implement the spoofing strategy by, in some of those instances, placing one or more spoofing orders after another trader had placed one or more smaller resting orders in the same or a correlated futures or cash market, the orders find. In other instances, another trader would place spoofing orders to benefit smaller resting orders of Gola and Brims.
