CFTC probes 'spoofing,' Senate investigates Wall Street

November 20, 2014 04:51 AM
Exchange Shorts

U.S. Securities and Exchange Commission unanimously gave its approval for the Regulation Systems Compliance and Integrity (Reg SCI) rule, Reuters reported. The rule requires exchanges and other venues to safeguard electronic trading systems, and inform the SEC regarding significant glitches as well as provide annual updates on compliance.

BGC Partners extended the expiration date of its tender offer to acquire all of the outstanding shares of GFI Group Inc. that it currently does not own for $5.25 per share in cash. The offer will now expire at 5.00pm New York City on December 9, 2014.

U.S. Senate Permanent Subcommittee on investigations published a report stating that large banks have used oil tankers, metal warehouses and other commodities in their possession to take advantage of commodity markets, Bloomberg reported. According to Senator Carl Levin, “we simply cannot allow a large, powerful Wall Street bank the power to influence the price of a commodity essential to our economy.”

U.S. Commodity Futures Trading Commission subpoenaed Chicago-based proprietary trading firm 3Red Trading, as well as its founders, Oystacher and Edwin Johnson, in a probe of the market-manipulation practice known as “spoofing”, in which traders make and then cancel deals very quickly with the intent of affecting prices.

U.S. Senate’s investigation into Wall Street’s physical commodities business produced findings that U.S. banks had manipulated prices and gained unfair trading advantages at their customers’ expense, Reuters reported. According to the report, Goldman Sachs, Morgan Stanley and JPMorgan had built large inventories of aluminum, oil, jet fuel and other commodities, and had failed to properly protect themselves from large, potential losses as a result of the stockpiles.

U.S. Federal judge rejected the assertion by U.S. bank that it should not be held liable for the actions of Peregrine Financial Group (PFG) founder Russell Wasendorf. According to the bank’s spokeswoman, Teri Charest, “we did not know about the Peregrine Ponzi scheme and in fact we were a victim of the same scheme.”
About the Author

Bernardo Mariano brings to ERDesk his experience structuring private deals for the acquisition of mutual exchanges. Prior to joining ERDesk Bernardo worked as a Director for Instinet and later, CEO of Reuters' Bondex. He holds an MS in Economics from University of Illinois and an MIA in Finance from Columbia University. He can be reaced at be reached at