The case

Yesterday, a former UBS precious metals trader was found not guilty of scheming to manipulate futures markets through a practice known as spoofing: American juries appear to be lenient towards former Swiss bankers. After Raoul Weil and Stefan Buck, André Flotron now has been acquitted. Unlike Weil and Buck, who used to work for UBS and Bank Frey in the asset management business, André Flotron was accused of having manipulated prices in the gold and silver trade. The jury in the Connecticut District Court in New Haven needed a day to reach their verdict after a one-week trial.

Source: Bloomberg and NZZ e-paper 26.04.2018

The commentary

“Spoofing” is the practice of manipulating prices where a trader places buy or sell futures contracts, but does not execute them. This simulates a demand or offer for a precious metal or currency to steer the price in the desired direction. Spoofing was banned under the 2010 US Financial Market Reform Act Dodd-Frank. This trial was only the second spoofing case brought to justice in the USA. In the first case a high frequency trader (MC) was sentenced to three years imprisonment in 2016. MC appealed against the judgment.

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