RTTNews, 25 June 2019
Merrill Lynch’s global commodities trading business agreed to pay $25 million to resolve the government’s investigation into a multi-year scheme by the company’s precious metals traders to mislead the market for precious metals futures contracts traded on the Commodity Exchange Inc., the U.S. Justice Department said.
Merrill Lynch admitted that, starting at least 2008 and continuing through 2014, precious metals traders employed by the company’s schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market. They did so by placing fraudulent orders for precious metals futures contracts that, at the time the traders placed the orders, they intended to cancel before execution.
In doing so, the traders intended to “spoof” or manipulate the market by creating the false impression of increased supply or demand and, in turn, to fraudulently induce other market participants to buy and to sell futures contracts at quantities, prices and times that they otherwise likely would not have done so. Over the relevant period, the traders placed thousands of fraudulent orders.