CFTC Settles Spoofing Charges with Ex-JPMorgan Metals Trader

The Commodity Futures Trading Commission (CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term) today settled spoofing charges against a former JPMorgan trader who pleaded guilty to similar criminal charges last year. The agency said it entered into a formal cooperation agreement with Christian Trunz, 35, of London, but the CFTC has not imposed monetary sanctions against him.

Christian Trunz, who worked at the bank’s London, Singapore, and New York offices, admitted conspiring with other gold, silver, platinum and palladium traders to place hundreds of buy or sell orders that he intended to cancel and not to execute at the time he placed the orders, a practice known as spoofing.

He pleaded guilty to two counts of conspiracy to commit wire fraud, agreed to meet with investigators and has been cooperating against unnamed co-conspirators, court records show.

The case is the latest in a series of prosecutions brought by US regulators as they have cracked down on spoofing. Trunz’s settlement followed the guilty plea by John Edmonds, another former trader at the bank in 2018.

“This case also shows that, where an individual acknowledges wrongdoing and demonstrates a commitment to cooperate and provide substantial assistance to our pursuit of other offenders, the CFTC will take that into account when assessing the cooperator’s sanctions,” said CFTC Director of Enforcement James McDonald.

The documents submitted to the court also paint a fairly concise picture of his overall tenure at the world’s biggest investment bank, outlining his interaction and contact with more experienced members of his trading team. In particular, the documents cite his supervision and interaction with more senior traders at the bank, which resulted in him being taught how to spoof from J.P. Morgan’s veteran traders.

Regulators and exchanges have stepped up their policing of spoofing in recent years; however, the people and firms they previously focused on were rather small-time avid gamers in markets. Earlier in January, regulators also ordered Citigroup to $25 million fine to settle charges it spoofed the Treasury futures market, the biggest spoofing settlement to date.

Spoofing, in general, is a practice in which a trader floods the market with fake orders by entering and quickly canceling large buy or sell orders on an 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, to fool other traders into thinking the market is poised to rise or fall. Though the tactic has long been used by some traders, regulators began clamping down on the practice only a few years ago.