CFTC Charges Nomura Trader for Price Manipulation

The United States Commodity Futures Trading Commission (CFTC) has brought charges against John Patrick Gorman III, the former Head of non-yen rate trading at Nomura, for manipulating the prices of an interest rate swap.

Announced on Monday, the charges by the watchdog highlighted that Gorman manipulated the prices knowingly to benefit the bank and later produced false statements to the CFTC investigators during an investigation and further destroyed relevant communications.

The lawsuit filed in the Manhattan district court did not name Nomura, but a Bloomberg report confirmed that Gorman is still employed by the Japanese trader but not as a trader.

Making Money for the Company

The CFTC detailed that on February 3, 2015, Gorman was handling the business with a bond issuer, whose bond issuer entered into a rate swap transaction with a Nomura affiliate, involving a US dollar interest rate swap spreads with a 10-year maturity.

Gorman, who is now stationed in the UK but previously in Japan, deliberately entered a trade to move the price of the bond which will in turn book more profits for Nomura. Though the bond issuer was informed about the price, he did not know that Gorman was trading against himself.

The US regulator further pointed out the manipulative nature of Gorman, who also boasted his ability to execute trades at lower levels.

Commenting on the case, Vincent McGonagle, CFTC’s acting Director of Enforcement, said: “Manipulative and deceptive conduct on swap 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 facilities and in the Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term markets harms their integrity and market participants, and we will take action to hold those who commit this type of misconduct accountable.”

“Further, the Commission will seek to hold accountable individuals who make false statements in our investigations.”

However, Gorman denied all allegations of misconduct against him through a statement by his lawyer.