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The
person, who spoke on condition of anonymity, said subpoenas were
issued last week to four brokerages: BGC Partners, GFI Group,
TFS-ICAP and Tullett Prebon Financial Services.
U.S. authorities have increased their scrutiny of so-called
'ghosting' or 'spoofing,' in which a trader tries to create a
false appearance of market interest in a stock, commodity or
other asset by placing orders and then immediately canceling
them. Authorities say such orders can be manipulative.
Representatives of BGC, ICAP and Tullett Prebon declined to
comment. GFI is majority-owned by BGC.
Shares of each of the publicly traded companies were trading
lower on Monday, in a broadly flat market.
This month, a jury in Chicago convicted a high-frequency trader
of commodities fraud and spoofing in the U.S. government's first
criminal prosecution of the trading practice.
The trader, Michael Coscia, was convicted under a relatively new
statute that was part of the 2010 Dodd-Frank Wall Street
regulatory overhaul, although as a state official Schneiderman
operates under different legal authority.
Besides false orders, other tactics in the foreign exchange
market have led to billions of dollars in settlements with
investors and regulators. U.S. and European regulators have
extracted more than $10 billion in settlements with seven banks
for failing to stop traders from trying to manipulate foreign
exchange rates.
(Reporting by David Ingram; Additional reporting by John McCrank;
Editing by Bill Rigby)
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