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WASHINGTON Citigroup Inc on Thursday
became the first-ever bank to get hit with civil “spoofing
charges,” after U.S. derivatives regulators said one of its
units entered U.S. Treasury futures market orders with the
intent of canceling them.
The Commodity Futures Trading Commission said that Citigroup
will settle the case without admitting or denying the charges
and pay a $25 million fine.
“We are pleased to have resolved this matter,” Citigroup
spokeswoman Danielle Romero-Apsilos said in a statement.
The CFTC first won new powers to go after manipulative “spoofing” in the 2010 Dodd-Frank Wall Street reform law.
The term refers to efforts by traders to create a false
appearance of market interest in a commodity or other financial
instrument by placing orders and then immediately canceling
The first person to be charged, both criminally and civilly,
with spoofing, was Michael Coscia, a New Jersey-based trader who
was accused of making illegal profits through spoofing the
Coscia went to trial and was found guilty by a jury. He was
sentenced to three years in prison. He is appealing his
To date, the most high-profile spoofing case, however,
involved Navinder Sarao, a London-based trader whom the Justice
Department and CFTC said helped contribute to the May 2010 “flash crash.”
Sarao pleaded guilty last fall to spoofing and wire fraud.
In the CFTC’s civil case against Citigroup, the regulator
said five traders at Citigroup Global Markets Inc engaged in
spoofing more than 2,500 times in various Treasury futures.
The bank was also charged with failing to supervise its
employees and provide adequate training to avoid the violations.
The CFTC said the bank cooperated during the investigation
and also self-reported some of the spoofing orders after CME
Group inquired about a number of suspicious orders.
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