Gold Trader’s Chat bragged about ‘how easy’ it is to manipulate prices

(Bloomberg) — Chat logs introduced as evidence by prosecutors during the Chicago spoofing trial of two former bullion dealers for the Merrill Lynch unit of Bank of America Corp. shows one of them, Edward Bases, bragging about how easy it is to manipulate prices.

On January 28, 2009, when Bases was working at Deutsche Bank AG, he made an offer for 2,740 gold futures contracts worth about $244 million over the course of four and a half minutes, according to Maria Garibotti, a vice president. president at Analysis Group that studied exchange and trade data for prosecutors. More than 98% were canceled without being filled, she said.

At the other end of the market, a fellow trader from Deutsche Bank, with whom Bases was working, sold his 170 contracts worth $15,172,500 as the price soared, Garibotti told judges on Wednesday.

“That shows how easy it is sometimes to manipulate it,” Bases wrote minutes after the trade in a chat message sent to another Deutsche Bank trader, Cedric Chanu, according to Garibotti. Chanu and another Deutsche Bank Trader, James Vorley, were sentenced last month to a year in prison each for their 2020 spoofing convictions in a separate trial.

“I f..k the mkt around a lot,” Bases said in another post.

Bases and fellow Merrill Lynch trader John Pacilio are facing federal fraud charges for allegedly counterfeiting the futures market from 2008 to 2014.

Another episode described by Garibotti involved transactions by Bases and Pacilio on August 9, 2010, when both were working at Merrill Lynch.

That day, Bases placed an iceberg order to buy 10 platinum contracts, six of which were filled upon placement, she said. Less than 10 seconds after Bases placed that buy order, Pacilio placed an order to sell 205 contracts for $15,856,750, which was nearly 90% of what was visible in the trade order book, Garibotti said. The price went down and the rest of Bases’ order was fulfilled, she said. Less than a second later, Pacilio’s sell order was canceled, she said.

Garibotti said Analysis Group employees in this case spent about 3,000 hours studying data over several years, charging the government $1.2 million for her work.

Defense lawyers have not yet begun cross-examination of Garibotti.

In opening statements Tuesday, Bases’ attorney told the jury that once her client understood that spoofing was illegal, he stopped, and that nearly all of the conduct the government identified was before the enactment of the Dodd-Frank Act, which specifically banned spoofing. .

The case is US v. Bases et al, 18-cr-00048, US District Court, Northern District of Illinois (Chicago).

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