Two Fairfield County residents and a former commodities trader at the Stamford office of UBS were charged in a scheme that the U.S. Department of Justice called the largest futures market criminal enforcement action in the department’s history.
The indictments targeted eight individuals in three federal districts regarding their alleged roles in manipulating futures markets for precious metals and the futures markets for S&P 500, Dow Jones Industrial Average, and NASDAQ E-mini futures contracts. The two Fairfield County residents, Edward Bases of New Canaan and John Pacilio of Fairfield, were identified as precious metals traders at unnamed global financial institutions and were charged with spoofing phantom orders in the commodities market in order to profit on what other traders assumed were legitimate orders. The UBS trader, Andre Flotron of Switzerland, was charged with conspiring with other UBS precious metal traders in spoofing scams between 2008 and 2013.
In connection with this investigation, UBS was penalized $15 million by the U.S. Commodities Futures Trading Commission. Two other financial institutions were also penalized: HSBC for $1.6 million and Deutsche Bank for $30 million.
“The Criminal Division’s message is clear: We are watching, we are closely monitoring the markets, and we will leave no stone unturned in our efforts to combat and eradicate illegal, fraudulent, and manipulative market conduct,” said Acting Assistant Attorney General John P. Cronan. “Our country’s markets are trusted globally, attracting investors from throughout the United States and around the world, and they must remain trusted. If investors lose trust and faith in our markets, our country suffers.”