Futures Regulator Fines Citigroup $25 Million For Spoofing In U.S. Treasury Market

The U.S. Commodity Futures Trading Commission settled charges against Citigroup Global Markets Inc. on Thursday for spoofing - bidding or offering with the intent to cancel the bid or offer before execution - in U.S. Treasury futures markets between July 16, 2011 and December 31, 2012. Citigroup will pay a $25 million penalty. Five of its traders spoofed more than 2,500 times in various Chicago Mercantile Exchange U.S. Treasury futures products by placing bids or offers of 1,000 lots or more with the intent to cancel those orders before execution. On at least one occasion, some of the traders coordinated with each other to implement the spoofing strategy, by placing one or more spoofing orders after another trader had placed one or more smaller resting orders in the same or a correlated futures or cash market. The regulator also cited the bank's broker-dealer subsidiary for failing to diligently supervise the activities of its employees and agents in conjunction with the spoofing activity. The CME Group assisted in the investigation. Citigroup neither admitted nor denied the allegations. Citi shares have gained 35% in the last 12 months, while the S&P 500 has gained 20.7%.