The criminal trial of former UBS Group AG (UBS) trader Andre Flotron is underway. Flotron is accused of engaging in spoofing in the gold market, including making orders for precious metals futures contracts not to actually execute them but to manipulate futures contracts prices. Flotron also is accused of training a more junior UBS trader on how to spoof orders. During opening arguments, US prosecutor Avi Perry explained to jurors that while Flotron may be accused of “spoofing,” this is still “fraud.” As in, it is no joke. The 2010 Dodd-Frank Act declared spoofing illegal in 2010.
Flotron is accused of colluding with others on the UBS precious metals desk to make fake orders so that others in the market, including high-speed trading algorithms, would change their prices. They allegedly made big orders for precious metals futures with no plans to see the trades through. Instead, they sought to profit from the price changes that resulted through the placement of smaller trades on the other side of the market. Meantime, Flotron and his alleged co-conspirators are accused of making it seem as if there was a certain supply or demand at play, which caused other market participants to respond accordingly. Flotron is accused of spoofing a number of times between 2008 and 2013.
In a parallel Commodity Future Trading Commission case announced earlier this year, Flotron was charged with spoofing and taking part in a “manipulative and deceptive scheme.”