October 12, 2018
In CFTC Action, Former Trader Kamaldeep Gandhi Admits to Engaging in Spoofing and Manipulative Schemes at Proprietary Trading Firms
CFTC Order Recognizes Gandhi’s Entry into a Cooperation Agreement with the Division of Enforcement
Washington, DC — The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Kamaldeep Gandhi, in which Gandhi admits to engaging in manipulative and deceptive schemes, along with other individuals, which involved thousands of acts of spoofing (bidding or offering with the intent to cancel the bid or offer before execution) with respect to a variety of futures products traded on the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, and the Commodity Exchange, Inc. The Order finds that Gandhi engaged in this unlawful activity while placing orders for, and trading futures contracts through, accounts owned by his former employers, two proprietary trading firms named as Firm A and Firm B in the Order.
The Order recognizes Gandhi’s entry into a formal cooperation agreement with the CFTC’s Division of Enforcement (Division). The Order requires Gandhi to cease and desist from violating the Commodity Exchange Act’s prohibition on spoofing and the use of manipulative and deceptive schemes. The Order also permanently bans Gandhi from trading and other activities in CFTC-regulated markets. In the Order, the CFTC reserves its determination as to monetary sanctions against Gandhi, pursuant to the cooperation agreement and Gandhi’s agreement to continue to cooperate with the Division.
CFTC’s Director of Enforcement Comments
James McDonald, the Director of Enforcement, commented: “Today’s enforcement action shows that the CFTC will continue to aggressively pursue individuals who spoof in our markets. This action also serves as an example of the range of tools we can bring to bear in rooting out this misconduct. This includes the fact that, in certain cases under the Division’s enhanced cooperation program, the Commission may elect to postpone the evaluation and assessment of monetary sanctions until cooperation is substantially complete.”
The Order finds that from at least September 2012 through March 2014 at Firm A and from at least May 2014 through October 2014 at Firm B, Gandhi, both individually and in coordination with others, placed thousands of orders to buy or sell futures contracts with the intent to cancel those orders prior to execution. In doing so, the Order finds that Gandhi intentionally sent false signals of increased supply or demand designed to trick market participants into executing against the orders he wanted filled.
In a separate action, the Department of Justice, Fraud Section, today announced criminal charges against Gandhi.
The CFTC’s Enforcement Division acknowledges and thanks the staff of the Market Regulation Department of the CME Group, the U.S. Department of Justice, Fraud Section, and the Federal Bureau of Investigation for their assistance.
This case is brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force, and the staff members responsible are Rachel Hayes, Rebecca Jelinek, Allison Sizemore, Stephen Turley, Peter Riggs, Chris Reed, and Charles Marvine.