Labaton Sucharow Investigates Manipulation of E-Mini Index Futures and Options

Labaton Sucharow has an ongoing investigation into the manipulation of E-Mini Dow Futures, E-Mini S&P 500 Futures, and E-Mini NASDAQ 100 Futures, and related options on these futures contracts (collectively, “E-Mini Index Futures and Options”). Labaton Sucharow is considering filing a class action on behalf of E-Mini Index Futures and Options investors.

In this Investor Alert, we provide: (1) an overview of the E-Mini Index Futures and Options manipulation allegations and (2) Labaton Sucharow’s experience in litigating similar market manipulation actions on behalf of injured investors.

If you would like Labaton Sucharow to provide a preliminary assessment of any impact the manipulation may have had on your E-Mini investments, please provide us, in electronic form, all E-Mini Index Futures and Options transactions you entered into between March 2012 and February 2015.

E-Mini Index Futures and Options Manipulation Overview

We are investigating commodities manipulation involving allegations that several traders and proprietary trading firms engaged in spoofing and other unlawful trading practices in the market for certain E-Mini Index Futures and Options traded on the Chicago Mercantile Exchange (“CME”). The Department of Justice (“DOJ”), the Commodity Futures Trading Commission (“CFTC”), and the CME have recently brought enforcement actions against at least three traders—Yuchun (Bruce) Mao, Kamaldeep Gandhi, and Krishna Mohan—for their participation in a scheme to manipulate CME E-Mini Index Futures and Options.

Spoofing in this context is the practice of bidding (signaling intent to buy) or offering (signaling intent to sell) with the actual intent to cancel the bid or offer before execution. This type of manipulation is a particularly pernicious form of market manipulation because it preys on market participants’ reasonable expectations that published bids and offers reflect genuine buying and selling interests. Market participants generally view bids and offers as genuine expressions of trading interest, and they react to those bids and offers by adjusting their own trading positions accordingly. In effect, market participants are trading on the spoofer’s deceit, which in turn, distorts the asset’s market price. Our preliminary investigation has revealed that these traders and firms engaged in spoofing for approximately three years (and potentially longer).

The estimated impact on the market could be quite significant. In a recent DOJ indictment against one trader, Yuchun Mao, DOJ charged that over the course of just two days, Mao’ spoofing scheme cost investors over $60 million. We are presently consulting with economic experts to evaluate the full scope of damages, and we can also evaluate your own exposure to the manipulation.

E-Mini Index Futures and Options Affected by Manipulation

The following types of futures and options were potentially affected.

• Futures
  • E-mini S&P 500 futures (ES)
  • E-mini NASDAQ-100 futures (NQ)
  • E-mini Dow ($5) futures (YM)
• Options
  • Any options tied to the above-listed futures contracts

Our Firm Has Significant Experience Prosecuting Manipulation Cases

Labaton Sucharow brings the sophisticated resources of a top-tier firm, and has secured exceptional results for its clients. The Firm’s experienced trial counsel understand how to maximize recoveries, as well as how to effectively address issues concerning confidentiality, publicity, and discovery. Because Labaton Sucharow can draw upon its long experience prosecuting misconduct in financial markets involving manipulation and fraud, the Firm is particularly well situated to prosecute Commodity Exchange Act (“CEA”) claims against the defendants. As just a sampling, the Firm has played a leading role in the following CEA cases:

• In re Foreign Exchange Benchmark Rates Antitrust Litig., No. 13-cv-07789 (S.D.N.Y.): The Firm serves as class and allocation counsel in an action alleging banks manipulated prices of FX transactions, including exchanged traded FX futures and options contracts ($2.3B in partial settlements to date).
• In re Natural Gas Commodity Litigation, No. 03-cv-06186 (S.D.N.Y.): The Firm served as co-lead counsel and obtained more than $100 million in settlements to resolve claims alleging that dozens of large energy companies manipulated the price of natural gas futures contracts traded on the New York Mercantile Exchange (NYMEX). The settlement was the second largest class action recovery under the Commodity Exchange Act in its 85-year history.
• In re Platinum and Palladium Antitrust Litig., No. 14-cv-09391 (S.D.N.Y.): The Firm serves as co-lead counsel in a case alleging that dealers conspired to fix and manipulation the prices of these precious metals and exchange traded futures and options contracts based on these metals.
• In re Amaranth Natural Gas Commodities Litigation, No. 07-cv-6377 (S.D.N.Y.): The Firm served as class counsel and obtained a $77.1 million settlement to resolve allegations that several energy trading firms manipulated the prices of NYMEX natural gas futures contracts.
• In re Optiver Commodities Litigation, No. 08-cv-06842 (S.D.N.Y.): The Firm served as class counsel and obtained a $16.7 million settlement to resolve claims alleging that Optiver Holding BV manipulated oil and gasoline futures contracts over a 24-day period in 2007. 

How We Can Help

If you would like Labaton Sucharow to provide a preliminary assessment of any impact the manipulation may have had on your E-Mini investments, please provide us, in electronic form, all E-Mini Index Futures and Options transactions you entered into between March 2012 and February 2015. Please contact the following attorneys for more information:

Christopher J. McDonald
(212) 907-0861
cmcdonald@labaton.com

Matthew J. Perez
(212) 907-0776
mperez@labaton.com