A former Deutsche Bank commodities trader was sentenced to 12 months and a day in prison for “spoofing” the futures markets for gold and silver between 2008 and 2013.
James Vorley, a British citizen who worked as a precious metals trader at Deutsche in London from 2007 until 2015, was sentenced on Monday by the Northern District of Illinois. He was found guilty in September along with Cedric Chanu, another ex-Deutsche trader. The pair had faced a maximum of 30 years in jail.
The sentencing is part of a case that the DoJ described in 2018 as “the largest futures market criminal enforcement action in department history”, following the charges brought against Vorley, Chanu and six other individuals.
Vorley and Chanu, who is scheduled to be sentenced on June 28, were convicted of manipulating metals markets through a practice referred to as spoofing.
This involves placing bogus orders to create the illusion of substantial supply or demand, which moves prices. Computers then cancel the orders before they can be executed, allowing the spoofer to exploit the manipulation for their own gain. It became illegal as part of the 2010 Dodd-Frank Act.
“Specifically, Vorley placed fraudulent orders that he did not intend to execute in order to create the false appearance of supply and demand and to induce other traders to transact at prices, quantities, and times that they otherwise would not have traded,” the US Department of Justice said in a statement.
Deutsche paid a $30m penalty to the Commodity Futures Trading Commission in 2018 for spoofing in the precious metals futures markets.
US regulators in recent years have stepped up enforcement action against spoofing, with authorities in October levying a $920m fine on JPMorgan Chase for eight years of giving a false impression of market demand in precious metals and US government bonds.