US regulator fines BofA $24 million for spoofing Treasury securities

Bank of America has been fined $24 million after two former traders made false trades using a practice called “spoofing” to try to influence the U.S. Treasury securities market, the industry regulator said Thursday US financial institution (Finra, its acronym in English). .

“Spoofing” involves placing orders that traders intend to cancel, hoping to create a false sense of market activity that moves prices in a direction that suits them and induces trades that other traders otherwise wouldn’t make.

Finra said a junior trader and his supervisor at BofA Securities made 717 “spoofing” trades between October 2014 and February 2021.

He also criticized the No. 2 U.S. bank’s oversight system for being designed to only detect “spoofing” through trading algorithms rather than manually.

Junior trader Tyler Forbes was accused of making 194 “spoofing” trades before he was fired from BofA in 2019.

He pleaded guilty in April 2022 to manipulating the prices of Treasury securities and was sentenced to two years of probation, including one year of house arrest.

The former supervisor, Sidney Lebental, was accused of carrying out 523 “spoofing” transactions. He left the bank in 2021 and faces disciplinary proceedings by Finra.

BofA neither admitted nor denied misconduct in accepting the agency’s fine and censure. The North Carolina-based bank said in a statement that it had cooperated with the regulator and had made significant investments to improve oversight and training.

In a separate case, former bank traders Edward Bases and John Pacilio were sentenced in March to a year in prison each for “spoofing” precious metals.

Source: Terra

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