September 16, 2019
CFTC Charges Futures Trader and Industrial Firm with Spoofing in Precious Metals Futures
Washington, DC — The U.S. Commodity Futures Trading Commission issued two orders today filing and settling charges against John Lawrence and his employer, Heraeus Metals New York LLC, for spoofing — bidding or offering with the intent to cancel the bid or offer before execution. The order against Lawrence finds he engaged in spoofing from at least May 2017 to January 2018 in silver and gold futures traded on the Commodity Exchange, Inc. (COMEX). The order against Heraeus finds the firm vicariously liable for Lawrence’s spoofing, which Lawrence engaged in while a trader for Heraeus. This case was brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force.
“This enforcement action demonstrates the CFTC’s commitment to taking aggressive action against spoofing in all of its forms and holding accountable both individual traders and the firms that employ them,” said CFTC Director of Enforcement James McDonald. “We will continue to work closely with our regulatory partners, as we did here, to hold wrongdoers accountable.”
The order against Lawrence requires him to pay a $130,000 civil monetary penalty
, and suspends him for four months from trading on or subject to the rules of any CFTC-designated exchange and all other CFTC registered entities and in all commodity interests. It also orders him to cease and desist from violating the Commodity Exchange Act’s spoofing prohibition. The order against Heraeus requires it to pay a $900,000 civil monetary penalty.
According to the orders, between May 2017 and January 2018, Lawrence placed hundreds of orders in the COMEX silver and gold futures markets with the intent to cancel the orders before execution. Lawrence’s trading pattern involved placing a small order, typically one lot, on one side of the market that he wanted to get filled (genuine order), and then placing a larger order, typically 20 lots, on the other side of the market that he intended to cancel before execution (spoof order). Lawrence placed the spoof orders knowing that they would often induce other market participants to fill his genuine orders. When Lawrence received a fill on his genuine orders, he would cancel his spoof orders.
The CFTC’s investigation was conducted in conjunction with a parallel inquiry by the CME Group, which has taken disciplinary action against Lawrence. The CFTC thanks CME Group for its assistance in this matter.
The Division of Enforcement staff members responsible for this matter are Allison Sizemore, Thomas Simek, Christopher Reed, and Charles Marvine, as well as former staff member Jim Humphrey.