A Rumson commodities trader and his Red Bank firm have been slapped with nearly $6 million in fines and paybacks orders by United States and British regulators for an alleged scheme to manipulate prices for oil, agricultural products and more, according to various media reports Monday.
According to a report by Bloomberg News carried on the Star-Ledger website, NJ.com, the U.S. Commodity Futures Trading Commission charged Michael Coscia and his firm, Panther Energy Trading, with market ‘spoofing,’ in which bids and offers in futures contracts for crude oil, metals and other commodities were made anD quickly withdrawn to create the illusion of market demand.
The liquid market manipulation occurred in 18 U.S. contracts, including natural gas, crude, metals, foreign currencies and financial indexes on CME Group’s Globex trading platform from Aug. 8, 2011, through Oct. 18, 2011, the agency said.
Spoofing, a form of disruptive trading that is becoming more common with the entrance of high speed trading, is a scheme in which false price bids are entered and then pulled back before anyone can execute them. It’s done to create “liquidity” at certain prices for big offers, and then make money from smaller offers, CFTC Commissioner Bart Chilton said.
In Panther’s case, the CFTC said, the company and Coscia would place a relatively small order to sell futures they wanted to execute, then quickly followed with several large buy orders at successively higher prices that they intended to cancel. By placing the large buy orders, they sought to give the market the impression that there was significant buying interest, making their small order more valuable, the agency said.
Both the firm and Coscia have been banned from trading for a year.
CNBC said there was no answer when it called Panther’s office for comment. A directory lists the business as located at 54 Broad Street.