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HSBC, Deutsche Bank And UBS To Fork Out $46 million In Spoofing Case

HSBC, Deutsche Bank And UBS To Fork Out $46 million In Spoofing Case

In a first of sorts, the US Justice Department, FBI and the Commodity Futures Trading Commission (CFTC) worked together to file criminal and civil charges against HSBC, UBS and Deutsche Bank for their alleged involvement in spoofing in equities and metals futures.

Spoofing which has been declared as a criminal offence under the Dodd-Frank Act, 2010 refers to placing sell or buy offers for futures contracts with an intention to cancel them prior to their execution. Creating the appearance of false demand, market prices are influenced by spoofers to gain benefits.

UBS, Deutsche Bank and HSBC have agreed to fork out $15 million, $30 million and $1.6 million respectively towards settlement of the civil charges. Penalties were reduced for the three of them as they had provided a great deal of co-operation during the investigations. Investigations which were conducted for periods dating back to 2008 revealed that several traders of the above three banks were indulging in spoofing in the precious metals market and manipulating in the S & P E-mini futures as well.

The verdict according to CFTC would serve as an example to show that individuals indulging in illegal activities will not be let off and will be held accountable by CFTC. It has been revealed that many of the involved individuals had earlier been in the employment of the three banks. The US Justice Department listed the names of eight individuals slapped with charges of fraud and spoofing belonging to European, Australian and American nationalities.

The investigations into the wrong doings in the banks had begun prior to last year but they were given a push by concerted efforts of McDonald who came on board the CFTC in March. He aimed to get to the bottom of corporate wrong doings by motivating companies and their staff to inform about the happening of such unlawful activities and offering assistance to the investigators and get their penalty amounts reduced in return.