CFTC says settlement with ex-UBS precious metals trader is unlikely

Maria Nikolova

The US regulator and Andre Flotron agree that settlement is unlikely at this time.

Settlement is unlikely for the time being in a civil case against ex-UBS precious metals trader Andre Flotron. The latest filings with the Connecticut District Court show that the parties are not willing to settle at this point.

The case was brought by the Commodity Futures Trading Commission (CFTC) in January this year. Flotron, a Swiss national, was employed by UBS from 2008 to 2013 as a precious metals trader.

The CFTC alleges that Flotron engaged in a manipulative and deceptive scheme in the precious metals futures market. Specifically, the CFTC alleges that he repeatedly engaged in the practice of spoofing – placing an order with the intent to cancel it before execution. According to the regulator, the defendant placed large orders that he intended to cancel before execution opposite small orders he desired to execute. By placing the large orders, the defendant intended to send market participants a false signal of increased supply or a false signal of increased demand and thereby trick market participants into executing against his smaller orders.

The CFTC seeks a permanent injunction, civil monetary penalties and other equitable relief.

In April this year, Flotron managed to beat the criminal case against him, as he was found not guilty of scheming to manipulate the futures markets via spoofing. The ex-UBS trader was acquitted of conspiracy to engage in commodities fraud.

In the meantime, a case against an Australian trader accused of spoofing, is gradually gaining momentum. Jiongsheng (“Jim”) Zhao is currently facing extradition proceedings in the Commonwealth of Australia. On May 21, 2018, Zhao consented to extradition to the United States.

In January, the United States Department of Justice charged Zhao in a criminal complaint with wire fraud, commodities fraud, making false statements to the CME, and spoofing offenses when he was a trader at a proprietary trading firm located in Sydney, Australia. According to the complaint, data analysis identified hundreds of instances of spoofing by Zhao on the CME between approximately July 2012 and March 2016. Furthermore, the complaint alleges that Zhao made false written statements to the CME after being confronted with allegations of his disruptive trading practices.

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