January 29, 2018
CFTC Orders UBS to Pay $15 Million Penalty for Attempted Manipulation and Spoofing In the Precious Metals Futures Markets
UBS’s Penalty Was Substantially Reduced in Recognition of Its Self-Reporting, Cooperation and Remediation
Washington, DC — The Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against UBS AG (UBS), requiring UBS to pay a $15 million civil monetary penalty and to undertake remedial relief. The Order finds that from January 2008 through at least December 2013, UBS, by and through the acts of certain precious metals traders on the spot desk (Traders), attempted to manipulate the price of precious metals futures contracts by utilizing a variety of manual spoofing techniques with respect to precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX), including gold and silver, and by trading in a manner to trigger customer stop-loss orders.
CFTC’s Director of Enforcement Comments
James McDonald, the CFTC’s Director of Enforcement, commented: “Today’s enforcement action demonstrates the Commission’s continued commitment to root out manipulation and spoofing in our markets. At the same time, this action shows that the CFTC will recognize and reward market participants who self-report misconduct, cooperate in the investigation, and remediate to fix the problems. Over the past year, the Division has worked to enhance its self-reporting and cooperation program, including through the announcement of new cooperation advisories. The resolution in this case, and the substantially reduced penalty for UBS, should send a strong signal to the market that the Commission takes seriously the benefits of self-reporting and cooperation. In addition, today’s actions reinforce the point of our whole cooperation program—which is to identify and hold individuals accountable for misconduct, and not just the companies that employ them.”
Further, as a reflection of the Division’s enhanced self-reporting and cooperation program, today’s action shows that the Commission will recognize and give meaningful credit to companies that substantially cooperate in our investigations and proactively undertake remedial efforts.”
According to the Order, the Traders placed relatively large bids or offers with the intent to cancel before execution (spoof orders) after another smaller bid or offer (resting orders) had been placed on the opposite side of the market. According to the Order, the Traders placed their spoof orders with the intent to create the false appearance of market depth, which the Traders believed and intended to create the impression of greater buying or selling interest than would have existed otherwise. The Order finds that, in engaging in the misconduct, UBS, by and through the acts of the Traders, also intended to manipulate the price of the relevant futures contract.
In addition, the Order finds that on certain other occasions between December 2009 through February 2012, UBS, by and through the acts of one of the Traders, placed orders and executed trades to attempt to manipulate the price of precious metals futures contracts in order to trigger customer stop-loss orders and obtain a profit on proprietary trading.
The Order finds that this conduct violated the Commodity Exchange Act and Commission Regulations and imposes a civil monetary penalty of $15 million, orders UBS to cease and desist from further violations, and to take specified steps to maintain and implement training programs and systems and controls to detect and deter spoofing by UBS personnel. The Order recognizes that UBS self-reported the misconduct, cooperated with the investigation and proactively took remedial steps. As a result, the civil monetary penalty imposed by the Commission has been substantially reduced.
The CFTC thanks and acknowledges the assistance of the U.S. Department of Justice, the Federal Bureau of Investigation, the Chicago Mercantile Exchange, Inc. and the UK Financial Conduct Authority.
This case is brought in connection with the CFTC Division of Enforcement’s Spoofing Task Force, and the staff members responsible for this case are Lara Turcik, David Oakland, Neel Chopra, Katie Rasor, Sam Wasserman, Brandon Wozniak, Alben Weinstein, Patryk J. Chudy, Lenel Hickson, Jr., and Manal M. Sultan.
Last Updated: January 29, 2018