Futures Trader Banned After Pleading Guilty to 'Spoofing'

By Dave Michaels and Alexander OsipovichFeaturesDow Jones Newswires

A former futures trader at a global bank was permanently barred from the industry after admitting he conspired to manipulate the price of gold and silver futures contracts.

David Liew, a trader based in Asia, also pleaded guilty in federal criminal court in Illinois on Thursday to using illegal spoofing techniques from 2009 to 2012. Regulators and prosecutors have cracked down on spoofing, which involves sending fake offers intended to push prices in a direction the trader wants. Congress made it illegal through the 2010 Dodd Frank financial overhaul law.

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Mr. Liew manually placed hundreds of orders on a trading platform operated by CME Group Inc. that were intended to trick other market participants into altering their prices in a way that would benefit his other offers to buy or sell, according to a plea agreement in his criminal case. Mr. Liew coordinated with other traders at his bank and was taught by other metals traders at the bank how to spoof, according to court documents.

According to one chat cited by the Commodity Futures Trading Commission, Mr. Liew told a trader at another bank that he "sold out...by just having fake bids."

A lawyer for Mr. Liew didn't immediately respond to a request for comment.

The CFTC said in its order that Mr. Liew pushed silver prices down to benefit the other trader's positions. The commission regulates futures trading in the U.S. and reached an agreement with Mr. Liew that banned him from trading commodities or futures.

The criminal charges to which Mr. Liew pleaded guilty this week carry a maximum sentence of five years in prison and a fine of $250,000, according to court documents.

Write to Dave Michaels at dave.michaels@wsj.com and Alexander Osipovich at alexander.osipovich@dowjones.com

(END) Dow Jones Newswires

June 02, 2017 13:44 ET (17:44 GMT)