This week, it was announced two former employees of a global financial institution had been charged for their alleged participation in fraudulent and deceptive trading in previous metals futures contracts. 56-year-old Edwards Bases of New Canaan, Connecticut and 54-year-old John Pacilio of Southport, Connecticut were each charged with a single count of conspiracy to commit wire fraud affecting a financial institution and commodities fraud.
The defendants were also charged with one count of commodities fraud each. Pacilio is charged with five counts of spoofing. The indictment accuses the defendants of engaging in multi-year schemes to mislead the market for precious metals traded on the Commodity Exchange Inc, which was an exchange run by the Chicago Mercantile Exchange Group. The defendants and their co-conspirators are accused of defrauding market participants by placing orders that they did not intend to execute in order to give the impression of false supply and demand.
The scheme attempted to convince other market participants to trade at prices, quantities and times that they wouldn’t have otherwise. At this point in time, the defendants are innocent until proven guilty beyond a reasonable doubt in a court of law. Further details have been made available here.