CFTC Fines New York Resident $635,000 for Commodity Futures Scam

The United States Commodity Futures Commission (CFTC) issued an order filing and settling charges against New York resident Simon Posen for allegedly running a scam operation 'spoofing' commodity futures contracts.

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Spoofing is when an individual bids or offers a certain deal, all the while intending to exit prior to Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term. Mr. Posen had been spoofing silver, copper, and gold futures contracts on the Commodity Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, and further spoofed crude oil futures contracts on the New York Mercantile Exchange for over three years. He allegedly ran the operation by himself from home between December 2011 to March 2015, according to the CFTC order.

Mr. Posen has been fined $635,000 in a civil monetary penalty and had been banned him indefinitely from the CFTC regulated markets. Mr. Posen will not be able to apply and register, nor will he avoid registration with the American regulator by claiming exemption from it under any circumstances.

CFTC's Division of Enforcement Reaction

James McDonald, the Director of CFTC’s Division of Enforcement, said that spoofing is a financially dangerous activity to clients: “Today’s enforcement action marks another successful spoofing prosecution by the CFTC. Illegal spoofing disrupts trading in the markets, undermines market integrity, and can cause serious customer harm. Individuals like Posen who spoof in our markets will face severe consequences. Indeed, Posen’s conduct here warranted not only a substantial monetary penalty, but also a permanent ban from trading in our markets.”

A week ago, the CFTC fined a Georgia-based trader and his defunct company $500,000, as they allegedly ran an unauthorized operation, offered misrepresentations, and managed illegal retail trading transactions.