CME Fines Trader $150,000 Over Alleged Oil, Metals Manipulation

By Nick Baker

CME Group Inc. (CME) fined Igor Oystacher $150,000 for trying to manipulate oil and metals markets.
Oystacher was also barred from trading on any of the exchange operator’s markets through Dec. 28, according to statements yesterday from CME describing orders of settlement with Nymex and Comex, two of its divisions. He neither admitted nor denied the allegations, according to the statements.
CME said Oystacher posted orders for futures contracts on crude oil, silver, gold and copper that he didn’t intend to execute, a practice sometimes referred to as spoofing that CME and other markets prohibit because such trades could be used to manipulate prices. The alleged violations in oil occurred from December 2010 to July 2011, while the other trades took place
from May 2011 to July 2011, according to CME.
The CME statements don’t identify Oystacher’s employer. An individual named Igor Oystacher founded Chicago-based 3Red Group in 2010, according to the company’s website.
The alleged violations occurred before 3Red Trading LLC began operations in September 2011, said Steve Strohmer, the company’s chief operating officer.
“This settlement did not involve our trading operations,” Strohmer wrote in an e-mail when asked about yesterday’s CME disciplinary actions. “We place extreme importance on compliance and work with our exchange partners to uphold the integrity of the markets.”
Oystacher is on vacation and unavailable to comment, Strohmer said. Michael Shore, a CME spokesman, declined to comment.

Spoofing Probes

Regulators are increasingly investigating allegations of “spoofing,” in which traders place and immediately cancel orders to try to move prices in their favor.
3Red and co-founders Oystacher and Edwin Johnson were subpoenaed in 2012 as part of market manipulation probe by the Commodity Futures Trading Commission, Bloomberg News reported on Nov. 19. The regulator’s probe of 3Red remains active, a person familiar with the matter, who requested anonymity because it isn’t public, said earlier this month.
Oystacher didn’t respond to a request for comment on the CFTC probe earlier this month. Johnson’s lawyer, Jeffrey Katz of The Patterson Law Firm LLC in Chicago, said in an e-mail this month that his client “is not under investigation,” and declined further comment.