Wall Street

Ex-UBS trader accused of manipulating metals market in 5-year 'spoofing' scheme

Key Points
  • A former UBS trader has been charged with fraud and conspiracy.
  • Andre Flotron is suspected of manipulating prices for precious metals in a case of "spoofing."
  • "We expect to be exonerated," Flotron's lawyer says.
Ex-UBS trader accused of manipulating metals market in 5-year 'spoofing' scheme
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Ex-UBS trader accused of manipulating metals market in 5-year 'spoofing' scheme

A former UBS trader has been accused of manipulating precious metals prices in a case of "spoofing."

Charges against Andre Flotron include conspiracy, wire fraud and commodities fraud.

The complaint, filed Tuesday in federal court in Connecticut, alleges that Flotron and unidentified co-conspirators devised and executed schemes to defraud other market participants through the illegal practice of spoofing.

The traders allegedly injected misleading information into the market by placing large orders for precious metals futures on the CME Group's commodities exchange, with no intention to execute the trade. They then sought to benefit from subsequent price fluctuations by placing smaller trades on the opposite side of the market, according to the complaint.

"By placing a large-volume order for precious metals futures contracts at certain price levels with the intent, at the time the order was placed, to cancel the order before execution, FLOTRON created the false appearance of substantial supply or demand to fraudulently induce other market participants to react to his deceptive market information," the complaint says.

The complaint did not say whether anyone else would be charged.

Flotron allegedly carried out the spoofing several times between July 2008 and November 2013.

Flotron, a Swiss resident, was arrested in New Jersey and appeared in federal court in Newark on Wednesday, according to Bloomberg News.

"We are going to ask for a speedy trial, we're going fight this case, and we expect to be exonerated at the end of the day," an attorney for Flotron told CNBC.

UBS declined to comment.

A source familiar with the matter told CNBC that Flotron left the bank in 2014 for reasons unrelated to the investigation.

Flotron joined the Swiss bank in 1999 and worked in Zurich, Switzerland, and Stamford, Connecticut, according to his LinkedIn profile.

In a separate spoofing case, David Liew, an ex-Deutsche Bank employee, settled with the Commodity Futures Trading Commission in June. He admitted to spoofing in trades for gold, silver, platinum and palladium. Liew was permanently banned from trading in commodities in CFTC-regulated markets.

— With reporting by CNBC's Jim Forkin