According to the SEC’s order, between April 2018 and May 2019, the former trader spoofed the U.S. Treasury market by entering orders that he had no intention of executing in an effort to obtain better prices on genuine orders that he entered simultaneously on the other side of the market. After the legitimate orders were filled, the phoney orders were then immediately cancelled.
“To mask his true intentions, the trader employed so-called ‘iceberg’ orders, which hid from the market the true size of the bona fide orders,” the SEC’s order said.
The SEC found that TD Securities benefited from the improper trading, generating at least US$400,000 in profits, that the firm lacked adequate internal controls, and that it failed to scrutinize the trader after receiving both internal and external warnings of potentially irregular trading activity.
In the settlement with the SEC, the firm was ordered to disgorge…
