The New York Attorney General has opened an investigation into possible manipulation of options contracts tied to currencies of developing nations, according to a person familiar with the matter.
The regulator filed subpoenas last week to four brokers that operate platforms for trading the contracts: Tullett Prebon PLC, BGC Partners Inc., GFI Group Inc. and TFS-ICAP Ltd., the person said. The investigation was started after the attorney general's office received a tip and is still at a preliminary stage, the person said.
The inquiries center on the alleged use of bids or offers by firms to bluff others into believing particular contracts had more buying and selling interest than they truly had, a practice also known as "ghosting" or "flying," the person said. By increasing volume, brokers that operate trading platforms could gain more fees, the person said.
The office's Criminal Enforcement and Financial Crimes Bureau is leading the investigation. Representatives for the brokers who were sent subpoenas declined to comment.
Spoofing has become a major area of enforcement action in markets for stocks, bonds and futures. Michael Coscia, a New Jersey-based trader, in November was found guilty of criminal fraud charges for spoofing the futures market. He is planning to appeal.
The investigation was reported earlier by Bloomberg News.
Write to Bradley Hope at firstname.lastname@example.org
Access Investor Kit for "BGC Partners, Inc."