Release Number 7688-18

January 29, 2018

CFTC Charges Jiongsheng Zhao with Spoofing and Engaging in a Manipulative and Deceptive Scheme

Washington, DC – The Commodity Futures Trading Commission (CFTC) today announced the filing of a federal court enforcement action in the U.S. District Court for the Northern District of Illinois against Defendant Jiongsheng Zhao, of Australia, charging him with spoofing and engaging in a manipulative and deceptive scheme in the E-mini S&P 500 futures contract market on the Chicago Mercantile Exchange (CME).

The CFTC Complaint alleges that from at least July 2012 through at least March 2017, Zhao repeatedly engaged in manipulative or deceptive acts and practices by “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution). On thousands of occasions, Zhao placed an order that he wanted to execute and thereafter entered a larger order on the opposite side of the market that he intended to cancel before execution. In placing these larger spoof orders, Zhao intentionally or recklessly sent false signals of increased supply or demand designed to trick market participants into executing against the orders he wanted filled.

CFTC’s Director of Enforcement Comments

James McDonald, the CFTC’s Director of Enforcement, stated: By injecting false information into our markets, spoofers gain an unfair advantage over law-abiding market participants, thereby hindering competition and undermining the integrity of our markets. That’s why the CFTC is committed to identifying this type of misconduct and holding the responsible individuals accountable.”

As alleged in the Complaint, Zhao carried out his scheme through a pattern of conduct that was designed to reap financial benefits from market participants’ reactions to his larger orders, which he intended to cancel before execution. Zhao engaged in the pattern approximately 2,300 times, which included 3,100 discrete instances of spoofing.

In its continuing litigation, the CFTC seeks civil monetary penalties, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the federal commodities laws, as charged.

The CFTC thanks and acknowledges the assistance of the U.S. Department of Justice, the Federal Bureau of Investigation, the CME, and the Australian Securities & Investments Commission.

This case is brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force, and the staff members responsible for this action are Laura Brookover, Allison Sizemore, Jordon Grimm, Carlin Metzger, Joyce Brandt, Christopher Reed, and Charles D. Marvine.

Media Contact
Dennis Holden

Last Updated: January 30, 2018