September 21, 2017 / 1:38 AM / a year ago

U.S. accuses ex-UBS metals trader of rigging metals prices

(Reuters) - U.S. prosecutors have charged a former senior precious metals trader at UBS Group AG with fraud and conspiracy over his alleged role in rigging prices.

According to a criminal complaint made available on Wednesday, Andre Flotron and his co-conspirators placed “spoof” orders for precious metal futures contracts that they intended to cancel before they could be executed.

They did this with an intent to conduct real trades “on the opposite side of the market” that would benefit from artificial price movements caused by the spoof orders, in a conspiracy that ran from July 2008 to November 2013, the complaint said.

The complaint was based in part on help from a cooperating witness, a former UBS trader who said Flotron taught him in his first week how to place spoof orders.

Flotron’s case was previously reported by Bloomberg News, which said the Swiss citizen was arrested while visiting his girlfriend, a dentist, in New Jersey, and ordered held without bail on concerns that he might flee to Switzerland.

According to Bloomberg, Flotron’s lawyer, Marc Mukasey, said the defendant had cooperated with U.S. prosecutors in an unrelated foreign exchange probe, and had visited his girlfriend in New Jersey many times before being taken into custody.

“Despite the fact that Mr. Flotron was blindsided by this arrest, he is prepared to fight this case,” Mukasey said in an email on Thursday. “We look forward to a speedy trial.”

Flotron began trading metals at UBS in 1999 and was put on leave in early 2014 after working for the bank in Switzerland and Stamford, Connecticut.

UBS was not accused of wrongdoing. The U.S. Attorney’s office in Connecticut is handling Flotron’s case.

In May 2015, the U.S. Department of Justice immunized UBS from possible criminal prosecution over metals price-rigging as part of a settlement in which the Swiss bank pleaded guilty to manipulating the London Interbank Offered Rate, or Libor, and other benchmark interest rates.

UBS also agreed at the time to pay a $203 million criminal penalty after breaching a December 2012 non-prosecution agreement resolving a Libor probe. ((

In June, another precious metals trader, David Liew, pleaded guilty to a criminal conspiracy charge in the U.S. District Court in Chicago over his role in spoofing contracts for gold, silver, platinum and palladium. ((

The Flotron case is U.S. v. Flotron, U.S. District Court, District of Connecticut, No. 17-mj-01467.

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