U.S. Department of Justice officials announced Monday that a New Canaan man has been charged with federal crimes following accusations that he engaged in deceptive trading practices on commodities markets.
Edward Bases, 55, has been charged with commodities fraud in connection with an alleged scheme to engage in both solo and coordinated spoofing on the Commodity Exchange Inc. or ‘COMEX’ while employed as precious metals traders at a leading global financial institution, according to a press release issued by Thomas Carson of the DOJ’s Office of Public Affairs.
Bases also is one of seven individuals charged following a coordinated multi-agency investigation with spoofing, an illegal trading practice that can be used to manipulate the commodities markets.
Others charged include: John Pacilio, 53, of Southport, who like Bases had been based in New York City; James Vorley, 37, of the United Kingdom; Cedric Chanu, 39, a French citizen; Jitesh Thakkar, 41, of Naperville, Ill.; Jiongsheng (“Jim”) Zhao, 30, of Australia; Andre Flotron, 53, a Swiss national currently residing in Wayne, N.J.; and Krishna Mohan, 33, of New York, N.Y.
“The charges announced today aggressively target, among other things, the practice of spoofing, which was allegedly employed in various forms by these defendants and/or their co-conspirators to manipulate the market for futures contracts traded on the Chicago Mercantile Exchange, Chicago Board of Trade, and COMEX,” the press release said.
It continued: “The defendants and their co-conspirators are alleged to have defrauded market participants and manipulated these markets by placing hundreds, and in some cases, thousands of orders that they did not intend to trade, or ‘spoof orders,’ to create the appearance of substantial false supply and demand and to induce other market participants to trade at prices, quantities, and times that they otherwise would not have traded. According to the charging documents, the spoof orders often had the effect of artificially depressing or artificially inflating the prices of futures contracts traded on CME, CBOT, and COMEX. In order to take advantage of the artificial price levels created by their spoof orders, the defendants and/or their co-conspirators are alleged to have executed real, genuine orders to buy (at the artificially low prices) or to sell (at the artificially high prices) in order to generate trading profits or to illicitly mitigate other trading losses.”
The conduct of those charged “poses significant risk of eroding confidence in U.S. markets and creates an uneven playing field for legitimate traders and investors,” Acting Assistant Attorney General Cronan said in the release.
“The Department and our law enforcement partners will use all of the tools at our disposal, including cutting-edge data analysis, to detect these types of schemes and to bring those who engage in them to justice. Protecting the integrity of our markets remains a significant priority in our fight against economic crime.”
The U.S. Attorney’s Office for the District of Connecticut helped lead the enforcement effort, according to Carson.