This is not a paywall.

Register for free to continue reading.

The news sucks. But your reading experience doesn't have to. Help us improve that for you by registering for free.

Please create a password or click to receive a login link.

Please enter your password or get a login link if you’ve forgotten

Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

Gold Trader’s Chat Bragged About ‘How Easy’ It I...

Business Maverick

Business Maverick

Gold Trader’s Chat Bragged About ‘How Easy’ It Is to Manipulate Prices

The World Gold Council thinks that throughout history less than 200,000 tons of gold have been mined. In 2012 Zimbabwe produced 20 tons. Nonetheless, in that year a major report commissioned by the Zimbabwe government on the mineral resources of Zimbabwe, estimated that the country contained 13 million tons of gold. (Photo: Waldo Swiegers / Bloomberg via Getty Images)
By Bloomberg
22 Jul 2021 1

Chat logs introduced as evidence by prosecutors at the Chicago spoofing trial of two former precious-metals traders for Bank of America Corp.’s Merrill Lynch unit shows one of them, Edward Bases, bragging about how easy it is to manipulate prices.

On Jan. 28, 2009, when Bases was working at Deutsche Bank AG, he put out bids to buy 2,740 gold futures contracts valued around $244 million over the course of four-and-a-half minutes, according to Maria Garibotti, a vice president at Analysis Group who studied exchange and trading data for prosecutors. More than 98% were canceled without being filled, she said.

On the opposite side of the market, a fellow Deutsche Bank trader Bases coordinated with sold his 170 contracts worth $15,172,500 as the price rose, Garibotti told jurors on Wednesday.

“that does show u how easy it is to manipulate it sometimes,” Bases wrote minutes after the trading in a chat message sent to the other 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 convictions in 2020 on spoofing charges at a separate trial.

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

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

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

That day, Bases placed an iceberg order to buy 10 contracts of platinum, with six being filled at 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 almost 90% of what was visible on the exchange order book, Garibotti said. The price went down, and the rest of Bases’ order was filled, she said. Less than a second later, Pacilio’s sell order was canceled, she said.

Garibotti said employees at Analysis Group put in about 3,000 hours studying data in this case over the course of several years, billing the government $1.2 million for its work.

The defense attorneys have not yet begun cross-examining Garibotti.

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


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

All Comments 1

Please peer review 3 community comments before your comment can be posted