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Recent Settlement Shows Spoofing Remains a Government Focus

Proprietary trading firm Tower Research Capital (Tower) agreed to settle civil and criminal cases with the Department of Justice (DOJ) and the Commodities Futures Trading Commission (CFTC) for $67.4 million. The government says that former traders at Tower spoofed thousands of commodities orders between 2012 and 2013.

The joint settlement between both agencies and Tower represents the largest spoofing settlement to date. The government claims that high-speed traders Kamaldeep Gandhi, Krishna Mohan, and Yuchun “Bruce” Mao manipulated Chicago-based exchanges by placing deceptively large buy or sell orders for E-mini futures contracts while filling smaller orders on the other side of the market, only to pull the larger orders once the smaller orders were filled. Nearly half of the $67.4 million settlement is intended for counterparties who lost money on those trades, while $24.4 million will go to CFTC, and $10.5 million in disgorgement funds will go to DOJ.

Notwithstanding significant Government spoofing trial defeats including United States v. Flotron and United States v. Thakkar, Tower’s record-breaking settlement demonstrates that spoofing continues to be a major focus for both DOJ and CFTC. If anything, securing several high-profile settlements and plea agreements in the past year has only emboldened the government’s pursuit of spoofing cases. Last month, DOJ filed spoofing charges against three traders under the Racketeer Influenced and Corrupt Organizations Act (RICO), a law that has scarcely been used against Wall Street since the mid-1980s. The RICO charges indicate that prosecutors may be resurrecting the law to go after white-collar defendants, perhaps creating a template for future spoofing prosecutions. Given this departure from the norm and these recent settlements, traders and trading firms should take heed: spoofing prosecutions aren’t going away.

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About this Author

Daniel P. Filor Criminal Lawyer Greenberg Traurig Law Firm
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Daniel P. Filor, a former Assistant U.S. Attorney for the Southern District of New York, focuses his practice on government investigations, securities fraud, antitrust law and white collar criminal defense. With both civil and criminal law experience, Daniel counsels clients on a wide variety of matters ranging from criminal fraud allegations to complex commercial litigation.

With more than a decade of experience in the U.S. Attorney’s Office, Daniel knows how governmental decision-making works, and draws on his experience to advise individual and organizational clients confronting...

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Nathan J. Muyskens Greenberg Traurig  DC Global White Collar Criminal Defense Practice Foreign Corrupt Practices Act
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Nathan J. Muyskens is Co-Chair of the Global White Collar Criminal Defense Practice and defends corporate and individual clients in criminal grand jury investigations and prosecutions, internal investigations, regulatory inquiries and enforcement matters, and related parallel civil proceedings. Nate defends companies in corruption investigations and other matters related to the Foreign Corrupt Practices Act, and has experience handling government antitrust investigations on behalf of companies in various industries, such as health care, air travel, defense, pharmaceuticals, energy, chemicals, home products, and technology. Nate is active in court and behind the scenes, working with prosecutors to abandon investigations before they have been made public or charges are filed.

Nate’s recent work includes co-leading a white collar defense trial victory in U.S. v. Flotron – the first ever acquittal in a commodities “spoofing” trial. Additionally, he represents numerous executives in the financial industry in a variety of government fraud investigations.  He has also represented a number of individuals and companies in the Special Counsel and Southern District of New York’s investigation into alleged improprieties relating to the 2016 presidential election. 

In addition, Nate has been trial counsel in numerous civil cases throughout the United States, including antitrust and trademark actions.

Concentrations

  • White collar criminal defense

  • Government investigations

  • Foreign Corrupt Practices Act

  • Antitrust investigations

  • Cybersecurity

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Sarah M. Mathews Commercial Litigation Lawyer Greenberg Traurig Law Firm
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Sarah M. Mathews focuses her practice on complex commercial litigation, white collar criminal matters, and regulatory investigations. She is experienced in handling government investigations, reinsurance, bankruptcy, federal antitrust and commercial arbitration. In addition to these matters, Sarah maintains an active pro bono practice.

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