Citigroup Punished for Treasury Market Spoofing by Five Traders

Five Citigroup Inc. traders manipulated the U.S. Treasury futures market more than 2,500 times, according to regulators, who imposed a fine of $25 million on the bank, the highest profile firm to be penalized for the illegal trading strategy known as spoofing.

The traders, who weren’t named by the U.S. Commodity Futures Trading Commission, were Stephen Gola, Jonathan Brims, Shlomi Salant, Jeremy Lao and Daniel Liao, according to a person briefed on the investigation who asked for anonymity to discuss a private matter. The abuses allegedly occurred between July 2011 and December 2012.

The regulator rebuked Citigroup for failing to adequately supervise its traders and for not having systems in place to detect spoofing, which involves entering fake orders designed to fool others into thinking prices are poised to rise or fall. The trading took place on markets owned by CME Group Inc. in Chicago.

“Spoofing is a significant threat to market integrity that the CFTC will continue to vigorously investigate and prosecute,” Aitan Goelman, head of enforcement at the CFTC, said in a statement announcing the settlement.

The $25 million fine is the biggest spoofing settlement to date. “We are pleased to have resolved this matter,” Citigroup said in a statement. The New York-based bank neither admitted to nor denied the allegations. Salant declined to comment. Gola, Brims, Lao and Liao didn’t respond to messages seeking comment.

Link: Citigroup Punished for Treasury Market Spoofing by Five Traders