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November 18, 2016

18 November 2016

Updates from the U.S. Commodity Futures Trading Commission

Trader pleads guilty to spoofing and wire fraud, and settles manipulation and spoofing case with CFTC.  On November 9, Navinder Singh Sarao pled guilty in the U.S. District Court for the Northern District of Illinois to one count of spoofing and one count of wire fraud related to the “flash crash” in 2010.  On the same day, the CFTC announced that it submitted a proposed Consent Order that would resolve its civil enforcement action in the U.S. District Court for the Northern District of Illinois against Sarao.  The CFTC’s complaint charged Sarao, along with his company Nav Sarao Futures Limited PLC, with unlawfully manipulating and spoofing with regard to the E-mini S&P 500 near month futures contract (E-mini S&P).  In the proposed Consent Order, Sarao admits to the allegations in the CFTC complaint that Sarao: (a) successfully manipulated the E-mini S&P on at least 12 days between April 27, 2010 and March 10, 2014 (including the May 6, 2010 “flash crash” day); (b) attempted to manipulate the E-mini S&P tens of thousands of times between April 2010 and April 17, 2015; (c) placed tens of thousands of bids and offers that he intended to cancel before execution (i.e., spoof orders) between July 16, 2011 and April 17, 2015; and (d) employed or attempted to employ a manipulative device, scheme, or artifice to defraud in connection with his spoof orders between August 15, 2011 and April 17, 2015.  On November 17, Judge Andrea R. Wood approved the Consent Order against Sarao, which requires him to pay a $25,743.174.52 civil monetary penalty and $12,871,587.26 in disgorgement.  The Court’s order also imposes permanent trading and registration bans against Sarao.

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18 November 2016

FERC releases 2016 Report on Enforcement and Two Enforcement White Papers

On November 17, FERC’s Office of Enforcement released its 2016 Report on Enforcement.  The Report shows continued focus on fraud and market manipulation, serious violations of mandatory Reliability Standards, anticompetitive conduct and conduct that threatens the transparency of regulated markets.

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