CFTC seeks to reopen case against former UBS trader accused of spoofing

Maria Nikolova

The CFTC and Andre Flotron have agreed to resolve the matter.

The United States Commodity Futures Trading Commission (CFTC) has earlier this week filed a Motion to reopen the case against ex-UBS trader Andre Flotron, who stands accused of engaging in an illicit practice known as “spoofing”.

In their most recent filings with the Connecticut District Court, the CFTC and Flotron ask the Court to reopen the case and to enter a proposed Final Judgment and Consent Order for Injunction, Civil Monetary Penalty and Other Equitable Relief against the defendant. The parties in the case have agreed on a settlement.

To effect the settlement of all charges alleged in the Complaint against him without a trial on the merits or any further judicial proceedings, Flotron consents to the entry of a Final Judgment and Consent Order for Injunction, Civil Monetary Penalty, and Other Equitable Relief.

Let’s recall that Flotron, who is a Swiss national, was employed by UBS as a trader from at least 2008 to January 2014.

From at least August 2008 through at least November 2013, Flotron placed large orders in the precious metals futures markets with the intent to cancel the orders before execution. He intended for the spoof orders to induce other market participants to transact on smaller, “Genuine Orders” that he placed on the opposite side of the market.

When Flotron’s Genuine Order was a buy order, his Spoof Order was an offer to sell. In placing Spoof Orders to sell, he intended to send market participants a signal of greater supply to create the misimpression that the price would likely decline and trick market participants into transacting on his Genuine Orders to buy.

When Flotron’s Genuine Order was an offer to sell, his Spoof Order was a buy order. In placing Spoof Orders to buy, he intended to send market participants a signal of greater demand to create the misimpression that the price would likely rise and trick market participants into transacting on his Genuine Orders to sell.

In placing the Spoof Orders, Flotron gave market participants the impression that he actually wanted to buy or sell the number of contracts in the Spoof Orders when, in reality, he did not.

As per the proposed order, the defendant is permanently restrained, enjoined and prohibited from engaging in trading, practices, or conduct on or subject to the rules of a registered entity that is, is of the character of, or is commonly known as “spoofing”. He is also prohibited from using or employing any manipulative device, scheme or artifice to defraud or engaging in any act, practice, or course of business, which would operate as a fraud or deceit upon any person.

The defendant is also restrained, enjoined and prohibited, for a period of one year from the date of entry of the consent order from trading on or subject to the rules of any registered entity, as well as from entering into any transactions involving “commodity interests”. He is also restrained and prohibited from controlling or directing the trading for or on behalf of any other person or entity in any account involving commodity interests, as well as from applying for registration or claiming exemption from registration with the Commission in any capacity, and engaging in any activity requiring such registration or exemption from registration with the Commission.

Finally, Flotron agrees to pay a civil monetary penalty in the amount of $100,000.

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