7 Person CFTC Team Charges Gold Manipulators Identified First On Zero Hedge With Gold And Silver Spoofing

Last Tuesday, as part of our ongoing effort to help the clueless commodity regulator, the CFTC, do its jobs of identifying, preventing and punishing manipulators, we wrote "Dear CFTC: Here Is Today's Illegal "Spoofing" In Gold Futures" in which we presented "3 examples of spoofing in gold futures which, you'll note, aren't difficult to spot if one is willing to expend the tiniest effort."

The gold spoofing was obvious, and as as the following Nanex charts showed, a cursory glance revealed how large buy and sell orders push prices up and down without every transacting.

2. Another set of instances appear about 50 minutes after the first set (shown in chart 1).

3. Another set of spoofing instances appear about an hour after the second set (shown in chart 2).

 

We go the spoofing right, but we got our audience wrong because the very next day it was not the CFTC, but the exchange on which said manipulation was taking place, the CME, that issued an order denying access to the alleged spoofers we had identified just hours before, Heet Khara and Nasim Salim, and which would be barred from trading on the CME for a period of 60 days.

Fast forward to today when, humiliated at having its job done not only by a for-profit exchange but a tinfoil fring blog first, the CFTC finally did its job and charged United Arab Emirates residents Heet Khara and Nasim Salim with "Spoofing in the Gold and Silver Futures Markets." Note: "and silver" - this is important.

Here is the full CFTC order:

Court Issues an Ex Parte Restraining Order Freezing Defendants’ Assets and Preserving Records

 

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a civil enforcement action in the U.S. District Court for the Southern District of New York against Heet Khara and Nasim Salim, residents of the United Arab Emirates.  According to the CFTC’s Complaint, Defendants engaged in unlawful disruptive trading practices known as “spoofing” in the gold and silver futures markets by placing bids and offers with the intent to cancel them before execution.

 

Based on Defendants’ pattern of unlawful spoofing conduct and the potential for dissipation of Defendants’ assets, on May 5, 2015, U.S. District Judge Deborah A. Batts issued an Order freezing and preserving assets under Defendants’ control and prohibiting them from destroying documents or denying CFTC staff access to their books and records. The court scheduled a hearing on the CFTC’s motion for a preliminary injunction for May 19, 2015.

 

The Complaint alleges that between at least February 2015 and at least April 28, 2015, Defendants Khara and Salim, both individually and in a coordinated fashion, regularly placed larger aggregate orders for gold and silver futures contracts on the Commodity Exchange, Inc. (COMEX) opposite smaller orders and cancelled the larger orders after the smaller orders were executed.

 

CME Group Inc.’s (CME Group) Market Regulation Department identified the disruptive trading practices and initiated an investigation.  On or about April 30, 2015, CME Group issued notices summarily denying Defendants Khara and Salim’s access to all CME Group markets and any trading platforms owned or controlled by CME Group.  CME Group Inc. operates four self-regulatory organizations and designated contract markets, which are the Chicago Mercantile Exchange Inc., Board of Trade of the City of Chicago, Inc., New York Mercantile Exchange, Inc., and COMEX.

 

CFTC Director of Enforcement Aitan Goelman commented: “Protecting the integrity and stability of the U.S. futures markets is critical to ensuring a properly functioning financial system.  Aggressive prosecution of spoofing is an important part of that mission.  Today’s actions make clear that the CFTC will partner with self-regulatory organizations to find and swiftly prosecute those who engage in such disruptive trading practices, wherever they may be.”

 

In its ongoing litigation, the CFTC is seeking preliminary and permanent injunctive relief, civil monetary penalties, and equitable relief including trading and registration bans and disgorgement. 

Curious where your taxpayer dollars go? It took the CFTC seven (7) well-paid manipulation sleuths to figure out what was revealed on the pages of Zero Hedge on the day of the manipulation, without us ever having accepted a single taxpayer dollar.

CFTC Division of Enforcement staff members responsible for this matter are Patryk J. Chudy, David Oakland, Neel Chopra, Katie Rasor, Trevor Kokal, Lenel Hickson, and Manal Sultan.

Finally:

The CFTC thanks and acknowledges the assistance of the CME Group in this matter.

You are welcome.

And perhaps in retrospect it is time for the CFTC to revise its announcement from September 25, 2013...

... in which it said:

"The Commodity Futures Trading Commission (CFTC or Commission) Division of Enforcement has closed the investigation that was publicly confirmed in September 2008 concerning silver markets. The Division of Enforcement is not recommending charges to the Commission in that investigation. For law enforcement and confidentiality reasons, the CFTC only rarely comments publicly on whether it has opened or closed any particular investigation. Nonetheless, given that this particular investigation was confirmed in September 2008, the CFTC deemed it appropriate to inform the public that the investigation is no longer ongoing. Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets."

Because, you see, had the "woefully underbudgeted" CFTC, which needed at least 7 employees to discover what took Nanex and Zero Hedge about 10 minutes of work, not closed its particular investigation, it would have caught not only this but countless other instances of gold and silver manipulation...

The good news, of course, is that with a UK spoofer, working out of his parents' basement, having been charged with causing the Flash Crash, and now two Arabs found guilty of manipulating gold and silver, both the S&P and the gold markets are once again completely unrigged, the CFTC is on top of everything, and investors should, please, come right back in.