The US Department of Justice (USDOJ) made the announcement against Christina Trunz , A London based precious metals trader for spoofing charges; here is part of their press release.
“A former precious metals trader at the London, Singapore and New York offices of a U.S. bank (Bank A) pleaded guilty today to conspiracy and spoofing charges, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.
“Christian Trunz, 34, of London, England, pleaded guilty in the Eastern District of New York to an information charging him with one count of conspiracy to engage in spoofing and one count of spoofing. Today’s pleas were accepted by U.S. District Judge Pamela K. Chen. Sentencing is scheduled for Feb. 19, 2020. Trunz resigned from his position as an Executive Director at Bank A earlier today.”
Here is part of the indictment, “TRUNZ and his co-conspirators, in order to maximize trading profits and minimize losses for themselves and Banks A and B, placed electronic orders to buy and sell gold, silver, platinum, and palladium futures contracts with the intent to cancel those orders before execution (the ‘Spoof Orders’). TRUNZ learned this trading strategy from more senior traders at Banks A and B, and he personally deployed this strategy thousands of times with the knowledge and consent of his immediate supervisors.
“In placing the Spoof Orders, TRUNZ and his co-conspirators intended to induce other market participants to trade against the conspirators’ genuine orders (that is, orders that TRUNZ and his co-conspirators did want to execute) on the opposite side of the market from the Spoof Orders at prices, quantities, and times at which the other market participants likely would not have traded otherwise.”
The indictment described one of the spoofing events, “On or about June 22, 2016, at approximately 2:14:33.935 a.m. (Central Daylight Time), TRUNZ placed a genuine order to sell twenty platinum futures contracts at a price of $981.80. TRUNZ’s genuine order was an “iceberg” order, meaning that only one lot was visible to other market participants at any given time. Beginning at approximately 2:14:35.926 a.m., TRUNZ placed a series of eight Spoof Orders to buy five contracts each (forty contracts total) at prices from $981.20 to $981.60. Beginning at approximately 2:14:36.520 a.m., four of the twenty contracts in his sell order were filled. Beginning at approximately 2:14:37.407 a.m., TRUNZ canceled all of his Spoof Orders in full.”
Spoofing occurs when a trader places an order they do not intend to execute but rather it is done to move the market in a certain direction; once the price moves the order is cancelled.
Spoofing is a form of fraud; while fraud is always illegal, spoofing was specifically defined and made illegal in the 2010 Dodd/Frank bill.
The Federal Bureau of Investigation along with the Commodities Futures Trading Commission both were involved in the investigation, according to the USDOJ press release.