3 former Citigroup traders admit spoofing

Three former Citigroup traders who admitted to spoofing U.S. Treasury futures markets will avoid sanctions after they cooperated extensively with a broader investigation by Wall Street’s main derivatives regulator.

Jeremy Lao, Daniel Liao and Shlomo Salant won’t receive penalties for manipulating markets in 2011 and 2012 because of their help in the agency’s pursuit of other wrongdoers, the U.S. Commodity Futures Trading Commission said in a statement Thursday. The three entered into the CFTC’s first-ever nonprosecution agreements, in which the government says it will drop wrongdoing claims as long as the targets fulfill certain obligations.

“These traders readily admitted their own wrongdoing, identified misconduct of others, and provided other valuable information, all of which expedited our investigation and strengthened our cases against the other wrongdoers,” said James McDonald, head of CFTC enforcement.

The CFTC fined Citigroup $25 million in January for failing to supervise its traders adequately and for not having systems in place to detect spoofing, which involves entering fake orders to trick others into thinking prices are poised to rise or fall.

The use of non-prosecution agreements signals how the CFTC may police securities laws under its new enforcement chief.