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HFT company fined $ 5.7 million accused its own traders of violations



The Bloomberg publication told about an interesting history of proceedings between one of the American HFT companies and its own traders. They cannot decide who should pay a large fine for bogus transactions on the exchange.

What happened


The American company DV Trading received a large fine for fictitious transactions on the CME Group. Traders who worked in the company, artificially increased trading volumes. The regulators considered that the violations were committed specifically and fined the management of DV Trading for $ 5.7 million.
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The company agreed with the fine, but stated that the situation was provoked by the private initiative of the traders and they must pay the fine. Now the company is suing its former employees. The lawsuit alleges that traders were responsible for illegal transactions and, according to the agreement concluded with DV Trading, must pay fines related to illegal actions.

Traders file their own lawsuit


Traders do not agree with the charges and filed their own lawsuit in the federal court of Illinois. They claim that DV Trading, having applied to the court, tried to punish them for cooperating with the authorities. They are confident that the owners of the company were aware of the illegality of their actions and even directly led some dubious transactions. Traders claim that one of the owners of the company instructed the employee "to increase the volume of trading by the end of the month as much as possible."

At the moment, traders are demanding compensation for not receiving their interest on sales, as well as for damage caused to their reputation due to court proceedings and other DV Trading actions.

The Commodity Futures Trading Commission mentioned only one trader as guilty in DV Trading. He was accused of participating in fictitious auctions and agreed to pay a fine of $ 240 thousand. However, the management of the HFT firm claims that three more traders who worked for the company were involved in the case.

According to regulators, fictitious transactions in futures contracts were organized by DV Trading and traders received additional income on the exchanges, increasing liquidity.

Dispute resolution


At the moment it is not clear who will eventually pay the fine. A third party appeared in the case - RCG Holdings, which previously owned DV Trading. Hoping to reduce the amount of payments to the state, the management decided to apply to its former parent company with the requirement to pay a third of the fines. According to court documents, they claim fines are business expenses. Representatives of the company RCG, stated in the lawsuit that the owners of DV Trading knew about the actions of the traders, so the parent company should not be held responsible for paying fines.

In any case, the situation in which the HFT firm is suing its own traders is unique to the market, experts polled by Bloomberg said. How this story resolves can have a major impact on the activities of HFT companies and their employees.

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Source: https://habr.com/ru/post/347978/

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