The Securities and Exchange Commission is charging Briargate Trading LLP and its co-founder Eric Oscher with placing fake orders to make it seem as if there were a lot of interest in their stocks so they could manipulate prices. The practice is an illegal trading strategy called spoofing. To settle the regulator’s charges, both the New York-based proprietary trading firm and Oscher have consented to pay over $1 million.
According to the regulator, the spoofing scam lasted from 10/11 to 9/12 and involved securities found on the New York Stock Exchange. Oscher, an ex-NYSE specialist, used his account at the firm to make numerous, big, non-bona fide orders before the exchange opened for trading in the morning. The orders affected market perception of the stocks’ demand and their prices.
The Commission said that Oscher would avail of the price shift in the spoofed securities by sending orders for them on the other side of the market to exchanges that opened before the NYSE. He would then cancel the NYSE orders prior to that exchange opening while unwinding positions he had made on the other exchanges. He and Briargate purportedly made $525,000 in profits from their spoofing activities.
The SEC said that the firm and its co-founder violated federal securities laws and an SEC antifraud rule. Although they are settling, the two of them are not denying or admitting to the findings. They have, however, consented to disgorge $525,000 of ill-gotten gains and $37,842.32 in prejudgment interest. Oscher will pay a $150,000 civil penalty and Briargate will pay $350,000. The two must cease and desist from causing or committing future violations of securities laws.
The 2010 Dodd-Frank Act made spoofing illegal. Unfortunately, there are those who still engage in this practice to manipulate the market. The SEC has brought a number of civil spoofing cases in the last few years. A person who engages in spoofing may also be subject to criminal charges.
Contact our securities fraud lawyers today if you suspect your losses are due to spoofing or any other illegal or negligent practices.