July 26, 2017
CFTC Orders New York Trader Simon Posen to Pay a $635,000 Civil Monetary Penalty and Permanently Bans Him from Trading in CFTC-Regulated Markets for Spoofing in the Gold, Silver, Copper, and Crude Oil Futures Markets
Order Finds that Posen Placed Thousands of Orders with the Intent to Cancel before Execution over a Period Spanning More than Three Years
Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against Simon Posen of New York, New York for engaging in thousands of incidents of “spoofing” — bidding or offering with the intent to cancel the bid or offer before execution — in gold, silver, and copper futures contracts traded on the Commodity Exchange, Inc., and crude oil futures contracts traded on the New York Mercantile Exchange over a period spanning more than three years. Posen traded from home for his own account and was not employed by any corporate entity, according to the Order.
The CFTC Order requires Posen to pay a $635,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing. The Order further permanently bans Posen from trading in any market regulated by the CFTC and from applying for registration or claiming exemption from registration with the CFTC in any capacity.
CFTC’s Director of Enforcement Comments
James McDonald, Director of CFTC’s Division of Enforcement, commented:
“Today’s enforcement action marks another successful spoofing prosecution by the CFTC. Illegal spoofing disrupts trading in the markets, undermines market integrity, and can cause serious customer harm. Individuals like Posen who spoof in our markets will face severe consequences. Indeed, Posen’s conduct here warranted not only a substantial monetary penalty, but also a permanent ban from trading in our markets.
“In addition, I would like to thank CME for their assistance in this case. We will continue to work together with all the relevant stakeholders to uncover, prosecute, and work to eliminate spoofing in our markets.”
The Order specifically finds that from at least December 2011 through March 2015, Posen, acting individually on behalf of his personal trading account, manually placed orders to buy and sell gold, silver, copper, and crude oil futures contracts with the intent to cancel these orders before execution (spoof orders). Posen engaged in a pattern whereby shortly after placing a large spoof order, he would place one or more smaller orders (or “iceberg” orders, which are orders where only a small portion was visible to the market) on the opposite side of the market; once the smaller orders were filled, Posen would cancel the unfilled spoof order. Often, Posen would immediately repeat this spoofing pattern in reverse to exit the position he had created and revert to being flat. Posen engaged in this pattern thousands of times during this time period, according to the Order.
CFTC Division of Enforcement staff members responsible for this case are James Deacon, Ilana Waxman, Jason Wright, Patrick Marquardt, Kara Mucha, Michael Solinsky, Elizabeth Davis, and Rick Glaser.
Last Updated: July 26, 2017