Two UAE traders sued for 'spoofing' gold, silver futures

New York

TWO traders from the United Arab Emirates were sued by US regulators over claims they were "spoofing" gold and futures markets by placing bids and offers they intended to cancel before execution.

Heet Khara and Nasim Salim, suspended for 60 days by CME Group Inc last week, should be permanently barred from trading and fined from their illegal profits, the US Commodity Futures Trading Commission (CFTC) said on Tuesday in a complaint in Manhattan federal court. The practices they are accused of are similar to those in the case against Navinder Singh Sarao, the British trader facing US charges for allegedly manipulating futures markets for five years and contributing to the 2010 flash crash.

Khara and Salim appeared to act "in a coordinated fashion", as recently as April 28, entering orders for gold and silver futures they never intended to execute, the CFTC alleged. Feigning interest in completing a trade is discouraged because it can drive prices in directions they wouldn't otherwise move.

"Today's action makes clear that the CFTC will partner with self-regulatory organisations to find and swiftly prosecute those who engage in such disruptive trading practices, wherever they may be," CFTC enforcement director Aitan Goelman said in a statement.

On Tuesday, US District Judge Deborah Batts issued an order freezing and preserving assets under the control of both Khara and Salim and prohibiting them from destroying documents or denying access to the CFTC's staff to their books and records, regulators said.

Judge Batts also scheduled a May 19 hearing for a permanent order barring the two from trading, according to the CFTC.

While both Khara and Salim were told by regulators that they should cease all trading and not try to withdraw funds, Khara responded to an e-mail seeking to withdraw funds and close the account, the CFTC said.

Khara later falsely told one of the merchants that the CME had authorised the closing of the account and the return of funds, the CFTC alleged in the complaint. Salim didn't respond to regulators' messages, according to the complaint.

Khara and Salim, or lawyers for each, couldn't be reached for comment on Tuesday.

The CFTC, which is CME Group's primary US regulator, last year said that CME was taking too long to complete investigations of improper trading. BLOOMBERG