Asia-Pacific precious metals trader David Liew has agreed to plead guilty in federal court to “spoofing” trades of futures contracts on the Chicago Mercantile Exchange.
From around December 2009 to February 2012, Liew conspired with other gold, silver, platinum and palladium traders to place hundreds of orders to buy or sell precious metals futures contracts that he intended to cancel and not to execute at the time he placed the orders, a practice known as spoofing, according to a plea agreement filed Thursday in U.S. District Court in Chicago.
Liew, who pleaded guilty to one count of conspiracy to commit wire fraud, was charged in a criminal complaint filed under seal in January. A month later, he agreed to meet with investigators and has been cooperating against unnamed co-conspirators, court records show.
Liew engaged in spoofing at the CME in early 2012, the plea agreement says.
Liew had joined a global bank about July 2009 after completing a bachelor’s degree, according to court records, which don’t name his employer. Liew was assigned to the metals trading desk in December 2009 and worked in the Asia-Pacific region.
The CME operated a global electronic trading platform for futures contracts trading called Globex. Liew and his co-conspirators accessed Globex to trade from locations worldwide, according to the plea agreement.
Liew placed spoof orders to create false impressions of supply and demand to cause other traders to buy or sell futures contracts for precious metals at prices, quantities or times at which they wouldn’t otherwise have traded.
Liew’s compensation at the bank was based partly on his trading profits, according to the plea agreement.
Federal sentencing guidelines call for 24 to 30 months in prison, in addition to supervised release, fines, forfeiture and restitution, but the plea agreement says that if Liew cooperates with authorities, prosecutors will recommend a lighter sentence.
Liew’s attorney couldn’t be reached for comment.
It’s not the first case involving spoofing on the CME.
Michael Coscia was sentenced in July to three years in prison and two years of supervised release for spoofing and commodities fraud. Coscia, of New Jersey, was the first defendant in the country to stand trial under new anti-spoofing laws included in the 2010 Dodd-Frank Act. He earlier was found guilty of six counts of spoofing and six counts of commodities fraud.
Navinder Singh Sarao pleaded guilty in November to wire fraud and spoofing, including for his role in the May 6, 2010, markets crash that saw tens of billions of dollars lost in just five minutes. A grand jury in Chicago indicted Sarao in 2015, alleging manipulation on the CME.
Sarao hasn’t yet been sentenced, a Justice Department spokesman said Friday.
Chicago Tribune’s Jason Meisner contributed.
Twitter @beckyyerak
