The US Commodity Futures Trading Commission (CFTC) has announced that commodity traders have been placed on trading bans by the US Court in the Northern District of Illinois. The traders have also been ordered to pay penalties for their operation of manipulative schemes.

Based on the press release, consent orders and final judgments were issued to Cedric Chanu and James Vorley, former dealers in precious metals, for spoofing and engaging in a manipulative or deceptive scheme.

Each Defendant Faces A Fine Of $150,000

Judge Steven C. Seeger, who presided over the case, says each of the defendants faces a civil monetary penalty of $150,000 as well as a five-year ban from engaging in any trading activities.

The offenders have also been given a cease and desist order from violating the CEA any further. According to the court order, Chanu and Vorley, while employed, placed orders for futures contracts on precious metals. Having placed orders, they simultaneously entered orders on the other side of the market for the same contract they were supposed to cancel before execution.

The Offenders Manipulated and Deceived Market Participants

As a result of placing the spoof orders, Chanu and Vorley recklessly or intentionally sent signals to market participants, showing great demand or supply. This created the impression that the price of the futures may swing downward or upward, misleading market participants to make wrong investments.

According to the statement, many of the market participants executed orders they placed on the opposite side of the market, causing them to lose significantly in the market.

Acting Director of Enforcement at the CFTC, Vincent McGonagle, stated that the enforcement action is another demonstration that the regulator is out to fish out those that engage in spoofing practices in the market. He added that the commission will keep working enthusiastically to hold both individuals and the companies they represent accountable for any irregular or manipulative practices in the market.