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Oct. 30 — The Securities and Exchange Commission will bring more cases against traders for spoofing, agency Enforcement Director Andrew Ceresney said Oct. 30, as part of a wide discussion of enforcement matters during a Practising Law Institute panel in New York.
The agency settled a $1 million spoofing case with small-scale proprietary trading shop Briargate LLC in October, and “we've got more coming down the pipe,” Ceresney said.
The SEC also has “no trend toward charging compliance offers” in its enforcement regime, he said. “We view them as partners in preventing misconduct.”
Spoofing is the practice of placing then canceling large orders, without intending to execute them, in order to move markets and then trade on the movement.
Large market-makers frequently cancel orders to keep up with market prices, but those cancellations are generally done in good faith, and market makers intend for their resubmitted orders to be executed.
Spoofing liability requires proof that the canceling party never intended to fulfill the orders and was just trying to move prices.
“The best evidence of intent are e-mails coming out of the mouths of traders themselves,” Ceresney said.
Ceresney also pushed back on claims that companies' chief compliance officers are at risk of facing an SEC action just for doing their jobs.
“We view them as partners in preventing misconduct,” he said about CCOs.
SEC Chairman Mary Jo White said the agency isn't “targeting” CCOs, after then-Commissioner Daniel Gallagher in June warned the agency to “tread carefully” in the area.
“Some people have said this is a trend, and I don’t think that’s the case,” Ceresney said. “We’re not intending to bring cases against CCOs and we think very carefully about that.”
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