February 25, 2019
In CFTC Action, Former Trader Krishna Mohan Admits to Engaging in Spoofing and Manipulative Scheme at a Proprietary Trading Firm
CFTC Order Recognizes Mohan’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 Krishna Mohan (Mohan), in which Mohan 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) in a variety of futures contracts traded on the Chicago Mercantile Exchange and Chicago Board of Trade. The Order finds that Mohan engaged in this unlawful activity while trading for his former employer, a proprietary trading firm named as “Firm A” in the Order.
The Order requires Mohan 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 bans Mohan for three years from trading and other activities in CFTC-regulated markets. In addition, the Order recognizes Mohan’s entry into a formal cooperation agreement with the CFTC’s Division of Enforcement (Division). In the Order, the CFTC reserves its determination as to monetary sanctions against Mohan in recognition of Mohan’s agreement to continue to cooperate with the Division pursuant to the cooperation agreement.
James McDonald, the Director of Enforcement, commented: “Today’s enforcement action again demonstrates the CFTC’s continued emphasis on pursuing individuals who spoof in our markets. This action also reflects some of the tools we can bring to bear in rooting out misconduct in our markets. As has been shown recently and again shown here, in certain cases under the Division’s cooperation program, where an individual has demonstrated a commitment to cooperate and has cooperated, 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, Mohan, 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 Mohan intentionally sent false signals of increased supply or demand designed to trick market participants into executing against the orders he wanted filled.
The CFTC previously filed charges against Mohan for this conduct in the U.S. District Court for the Southern District of Texas, CFTC v. Mohan, No. 18-cv-260 (S.D. Tex. Jan. 28, 2018). That action was dismissed without prejudice in connection with the filing of this administrative proceeding.
In a separate action, Mohan recently pleaded guilty in the U.S. District Court for the Southern District of Texas to one count of conspiracy to commit wire fraud, spoofing, and commodities fraud, with regard to conduct similar to that in the CFTC action. Mohan is awaiting sentencing on that charge.
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.