A Chicago trader and his firm have agreed to pay $2.5 million to resolve a lawsuit by the U.S. Commodity Futures Trading Commission accusing them of using a banned trading tactic known as "spoofing" to manipulate markets, the agency said on Tuesday.
Under the agreement, Igor Oystacher and his proprietary trading firm, 3Red Trading LLC, have also agreed to the hiring of an independent monitor to assess their future trading for potential violations for the next three years, the CFTC said.
The settlement, which U.S. District Judge Amy St. Eve in Chicago approved on Tuesday, came after the disclosure in October that a deal had been reached to resolve the lawsuit, which was filed in October 2015.
In its lawsuit, the CFTC contended that Oystacher and 3Red repeatedly used spoofing in several major futures contracts, including the e-mini S&P 500 futures ESc1, along with crude oil, natural gas and copper futures, and the volatility index .VIX futures contract between December 2011 and January 2014.
Spoofing is where a trader creates a false appearance of market interest in a stock or commodity by placing orders and then immediately withdrawing them. Oystacher's firm is required to submit to monitoring along with using additional compliance tools.
Oystacher and his firm had denied the charges. As part of the settlement, the defendants neither admitted nor denied wrongdoing, court papers show.
The case is U.S. Commodity Futures Trading Commission v. Oystacher et al, U.S. District Court, Northern District of Illinois, No. 15-cv-09196.
(Reporting by David Gaffen and Nate Raymond in New York; Editing by Matthew Lewis)