Details are emerging of how a trading firm 3Red Trading is being investigated by its regulators, the Commodity Futures Trading Commission, and of how its former chief risk officer has brought proceedings against its advisers at Gardiner Koch. Edwin Johnson, co-founder of 3Red, is responding to questions – along with the other co-founder and 3Red itself – raised by the regulator over its alleged involvement in ‘spoofing’. Spoofing happens when trades are placed and immediately cancelled, with the aim of manipulating prices.
First indictment
Mr Johnson is now accusing his former lawyers of having a conflict of interest as Gardiner Koch also acted for 3Red and the other co-founder. Spoofing is a relatively new area for regulators who are enforcing it with reference to the 2010 Dodd-Frank Act. The first person was indicted for it only last month. Source: Bloomberg Businessweek
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