CFTC Sanctions colorado Trader and illinois Company to Pay $200,000 for Spoofing
WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) today announced charges and a subsequent settlement against Brett Falloon, of Colorado, and Flatiron Futures Traders LLC, of Illinois, for engaging in spoofing activity in the E-mini S&P 500 and E-mini Nasdaq 100 futures markets traded on the Chicago Mercantile Exchange.
The CFTC order requires Falloon and Flatiron to jointly pay a $200,000 civil monetary penalty. Additionally, Falloon is prohibited from trading commodity interests for a period of 12 months. Both parties have been ordered to cease and desist from further violations of the spoofing prohibition outlined in the Commodity Exchange Act.According to the CFTC’s findings, the manipulative conduct occured between May and December 2022.Falloon, trading on behalf of Flatiron, placed bids and offers with the intention of canceling them prior to execution.
The scheme involved placing legitimate orders intended for execution on one side of the market, while together entering spoof orders designed to be canceled on the opposite side. Once the genuine orders were filled, the spoof orders were promptly withdrawn. These genuine orders were frequently enough executed aggressively, crossing the bid-ask spread for immediate fulfillment.
the CFTC resolute that Falloon’s spoof orders consistently represented a ample portion of the orders displayed at the top price levels. In total, the volume of contracts in his spoof orders was five times greater than the volume in his legitimate orders.
The order further states that Falloon intentionally misled other market participants with these spoof orders. This manipulation induced other traders to either cross the bid-ask spread to fill Falloon’s genuine orders, or to place resting orders at the best available offer, ultimately enabling Falloon to execute his legitimate orders more quickly, in larger quantities, and at more favorable prices.
The CFTC acknowledged the assistance provided by CME Group Inc. during the investigation.
The case was led by Michelle Bougas, Patrick Marquardt, Brian Hunt, Kathleen Banar, and Paul Hayeck of the CFTC’s Division of Enforcement, with contributions from former staff members Erica Bodin and Deputy Director Rick Glaser.
