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Gold, Silver Manipulation: CFTC Fines Deutsche, USB, HSBC For Spoofing Markets

Kitco News

(Kitco News) - Three major European banks have been fined by the Commodity Futures Trading Commission for “spoofing” and manipulating gold and silver markets.

The CFTC announced Monday that Deutsche Bank, UBS and HSBC face fines totaling $46.6 million. Deutsche Bank was the hardest hit as it was fined $30 million. UBS was ordered to pay $15 million and HSBC was fined $1.6 million.

Spoofing, according to some traders, is the result of high-frequency trading and is a manipulation technique where bids and offers are placed in bad faith to create a misrepresentation of demand and sentiment in the marketplace. The orders are quickly canceled before being filled.

“Spoofing is a particularly pernicious example of bad actors seeking to manipulate the market through the abuse of technology. The technological developments that enabled electronic and algorithmic trading have created new opportunities in our markets,” said James McDonald, director of Division of Enforcement at the CFTC. “As these cases show, we will work hard to identify and prosecute the individual traders who engage in spoofing, but we will also seek to find and hold accountable those who teach others how to spoof, who build the tools designed to spoof, or who otherwise aid and abet the wrongdoing.”

According to the CFTC, the market manipulation goes as far back as early 2008. The U.S. regulator also noted that USB received a reduced fine compared to Deutsche Bank as it cooperated with the investigation and self-reported the misconducts.

Along with the three European Banks, the CFTC said that it also fined six individual traders for spoofing and manipulating precious metals markets.

The CFTC fines are the latest in the precious sector that has been mired with manipulation allegations since 2014. In 2014, these three banks along with The Bank of Nova Scotia, Barclays and Societe Generale were named in a lawsuit that alleged manipulation and collusion during the twice-day London gold fix. The 100-year old auction was replaced with a digital auction mechanism owned by the London Bullion Market Association.

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