Ex-traders plead guilty to wire fraud, commodities fraud and spoofing

Maria Nikolova

Krishna Mohan and Kamaldeep Gandhi face sentencing in February 2019.

Krishna Mohan and Kamaldeep Gandhi, former commodities traders of a New York-based financial services firm have pleaded guilty for their participation in a $60 million commodities fraud and spoofing conspiracy, the United States Department of Justice has announced.

Mohan pleaded guilty on Tuesday, November 6th, to one count of conspiracy to engage in wire fraud, commodities fraud and spoofing. His sentencing is scheduled for February 28, 2019, before U.S. District Judge Gray H. Miller of the Southern District of Texas.

Gandhi pleaded guilty on November 2, 2018, to two counts of conspiracy to engage in wire fraud, commodities fraud and spoofing. His sentencing is scheduled for February 22, 2019, before U.S. District Judge Ewing Werlein Jr. of the Southern District of Texas.

Gandhi and Mohan admitted that from March 2012 to March 2014, they conspired with Yuchun “Bruce” Mao and others at Trading Firm A to mislead the markets for E-Mini S&P 500 and E-Mini NASDAQ 100 futures contracts traded on the Chicago Mercantile Exchange (CME) and E-Mini Dow futures contracts traded on the Chicago Board of Trade (CBOT). In addition, the ex-traders admitted they and their co-conspirators placed thousands of orders that they did not intend to execute, or “spoof orders,” in order to obtain executions of other orders, or “primary orders,” at better prices, quantities and/or times than otherwise possible to the benefit of the co-conspirators and Trading Firm A. They also admitted the United States’ calculations that the scheme resulted in market losses of more than $60 million.

Furthermore, Gandhi admitted that from May 2014 through October 2014, while employed at Trading Firm B, he conspired with others to mislead the markets for E-Mini S&P 500 futures contracts traded on the CME by agreeing to place, and himself placing, hundreds of spoof orders for E-Mini S&P 500 futures contracts in order to create the false and misleading appearance of increased supply or demand. Gandhi also admitted the United States has calculated that the scheme resulted in market losses of more than $1.3 million.

The FBI’s Chicago Field Office is conducting the investigation.

The US authorities have been active in prosecuting traders engaged in “spoofing”. These actions sometimes target individuals residing overseas. For instance, Jiongsheng (“Jim”) Zhao, an Australian trader accused of “spoofing”, has been incarcerated in Australia at the request of the United States Department of Justice since January 29, 2018. He awaits extradition and an opportunity to formally respond to related criminal charges advanced against him by the DOJ.

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